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The importance of proper employee classifications

| Sep 24, 2019 | Business Planning |

Employee support is the lifeblood of many businesses. Therefore, it is quite beneficial for employers to have protocols in place that help to support their employees.

Along with them being beneficial for productivity, having necessary business protocols in place aids in keeping the business out of litigation. Particularly in regards to employees, there are a few important aspects for determining employee classifications

The law

OSHA provides set stipulations and regulations that businesses must follow to protect employees. Along with those requirements, the state of Colorado partnered with the Department of Labor to create the memorandum of understanding for the state. Several states have their own version of the document, which covers a few key employee concerns, including:

  • Wage increments
  • Temporary work durations
  • Remote work regulations
  • Longevity in a position

Employers should stay abreast of the current employment laws that apply both nationally and locally. While some larger companies may choose to devote a legal department to this task, other businesses may choose to consult with an attorney either regularly or periodically.

Proper classification

A worker’s classification plays an important part in determining how the labor laws and various regulations apply. Therefore, it is critical that employers properly identify employees and make such designations clear in the employee or non-employee agreement. A few essential factors contribute to determining a worker’s proper classification, such as:

  • The employer’s control in the relationship
  • Employer investment versus the employee or contractor
  • Necessary skills for the position
  • Personal profit or loss of the worker

Along with clearly identifying employee and non-employee workers with agreements, it is beneficial to include agreement stipulations in the company business plan, as well. 

The understanding and implementation of these aspects can help ensure businesses comply with the law and provide appropriate working conditions for employees. By doing so, they help to foster a positive work environment, which can be a strong motivation for quality employees.