Hire employees and contractors

in

USA

Capital city

Washington D.C.

Currency

United States Dollars (USD)

Minimum wage

$7.25 per hour (2022)

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1
Employees vs. Independent Contractors in the USA
2
Employee Legal Rights and Benefits
3
Independent Contractors in the USA
4
Contracting with Ontop Holdings Inc.
5
Independent Contractor Benefits and Taxes
6
How to Structure an Independent Contractor Agreement

Start hiring globally

in

USA

1

Employees vs. Independent

Contractors in

USA

An Employment Relationship is the traditional working relationship between Employee and Employer, governed by an Employment Agreement and Labor Laws (CLT).

An Employee in Brazil (Article 3 CLT):

Stipulation of specific service to be rendered

Stipulation of specific service to be rendered

Stipulation of specific service to be rendered

An employment relationship exists

Subordination and dependency = orders and instructions from Employer

Salary and Compensation

* FLSA applies to all private employers and employees who in any workweek are either (i) engaged in interstate commerce or in the production of goods for commerce (individual coverage); or (ii) employed by an enterprise engaged in commerce or the production of goods for commerce with gross annual sales or business of at least $500,000 (enterprise coverage). (29 U.S.C. §§ 203(r), (s), 206(a), and 207(a).)

Some characteristics of an independent contractor includes:

Stipulation of specific service to be rendered

Stipulation of specific service to be rendered

Stipulation of specific service to be rendered

Independent Contractor is fully independent and autonomous

Independent Contractor is fully independent and autonomous

Technical and Administrative autonomy, at its own expense and risk

Workers not qualifying as employees under the FLSA are not covered by this statute (as Independent contractors).

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2

Employee Legal Rights in

USA

  • Minimum wage for compensable time
  • Overtime pay if the employee is not exempt from the FLSA
  • Prohibiting sex-based pay differentials
  • Imposing employer recordkeeping and posting obligations
  • Protection under the FSLA
  • Traditional group health plan arrangements (insured or self-funded)
  • Defined contribution health plan arrangements and health reimbursement arrangements (HRAs)
  • Retirement or pension plans and retirement benefits
  • Life insurance
  • Disability insurance
  • Sick days
  • Paid vacations
  • Severance

Other benefits and/or added extras may be optional, but can indicate the existence of an Employment relationship:

  • Life insurance
  • Disability insurance
  • Sick days
  • Paid vacations
  • Severance
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3

Independent Contractor

in

USA

  • Charges fees for service
  • Is engaged only for the term required to perform an identified service or task
  • Is responsible for paying their income, social security, and Medicare taxes.
  • Retains control over the method and manner of work
  • Retains economic independence
  • Is not protected by most federal, state, or local laws intended to protect employees
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4

Independent Contractor Benefits and Taxes

What benefits can be given to Independent Contractors?

Independent contractors are eligible to receive equity-based awards, including restricted stock, restricted stock units, non-qualified stock options, and stock appreciation rights. However, independent contractors should not be offered or given benefits that are associated with employment relationships, such as health insurance, retirement or pension plans, incentive stock options, paid vacation, sick days, life or disability insurance, and fringe benefits

Which party is responsible for the payment of taxes? The Client or the Independent Contractor?

In an independent contractor relationship, the vendor or independent contractor is generally required to pay its own taxes resulting from any compensation paid to it by the contracting party.

Do employees or companies have to pay social security in this jurisdiction?

In an independent contractor relationship, the vendor or independent contractor is generally required to pay its own taxes resulting from any compensation paid to it by the contracting party.

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5

Contracting with Ontop Holdings Inc.

Does the company hiring Ontop have to pay withholding taxes for contracting Ontop Services?

No withholding is needed between US entities for personal service payments. No withholding is needed for payments made to foreign persons if the services are performed outside of the USA. If they are performed within the USA, a 30% withholding rate is applicable. No withholding is needed for payments made to US persons, regardless of where the services are performed, but a 1099 is needed to be filed by January each year to report payments made to US persons.

Withholding is only required in 2 instances:

  1. When somebody is an employee of a corporation, not a contractor
  2. When a Foreign Person is paid US Source income (services performed outside of the US are not considered US source).
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6

How to Frame an Independent Contractor Relationship

  1. Use an independent contractor agreement to establish the terms of the working relationship. Avoid using employment applications, employment agreements, and other employee on-boarding documents when engaging independent contractors;
  2. Avoid using former employees as independent contractors or having independent contractors do the same work as employees.
  3. Require independent contractors to complete a Form W-9, not Form W-4 used for employees. Do not complete a Form I-9 for independent contractors.
  4. Do not allow independent contractors to manage company employees. Avoid independent contractor participation in the hiring, discipline, or termination of company employees.
  5. Pay contractors by the project or by an agreed-on flat fee at regular intervals, not by the hour, week, or month. Companies should require contractors to submit invoices and should pay those invoices from accounts payable, not payroll.
  6. Do not reimburse independent contractors for business expenses. An independent contractor operates a business and is responsible for expenses. Contractors should factor business expenses such as travel, supplies, and tool rental into the cost of the project.
  7. Do not provide contractors with employee-type benefits like health insurance, paid vacation, paid holidays, sick leave, and retirement benefits. Require contractors to affirmatively waive their right to those benefits.
  8. Avoid requiring uniforms, name tags, grooming standards, and similar workplace requirements typically imposed on employees.
  9. Issue separate guidelines for independent contractors, vendors, and other third parties instead of providing them with a copy of the employee handbook.
  10. Do not invite contractors to employee-only events or meetings, such as holiday parties, company retreats, team-building events, town halls; and employee recognition events.
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LEGAL DISCLAIMER

THIS COMMERCIAL PLAYBOOK (“PLAYBOOK”) SHOULD IN NO WAY BE CHARACTERIZED CONSIDERED AS A LEGAL ADVICE FOR THE PURPOSE OF HIRING INDEPENDENT CONTRACTORS, SERVICE PROVIDERS AND/OR EMPLOYEES. THIS PLAYBOOK SHOULD BE CONSIDERED AS AN INFORMATIVE SUMMARY OF ONTOP'S PREVIOUS EXPERIENCES AND SHALL NOT BE INTERPRETED AS SUGGESTIONS AND/OR ADVICE TO ITS CLIENTS AND/OR THIRD PARTIES. ONTOP SHALL NOT BE RESPONSIBLE OR LIABLE FOR ANY INTERPRETATION OF THIS TEXT BY THIRD PARTIES AND/OR CLIENTS. ONTOP SUGGESTS THAT A PROFESSIONAL OPINION MUST COME FROM EACH PARTY'S OWN GROUP OF LAWYERS AND/OR ACCOUNTANTS. CLIENT EXPRESSLY ACCEPTS AND AGREES THAT THIS PLAYBOOK SHALL NOT BE CONSTRUED AS AN OPINION OR ORDER. CLIENT SHALL ALSO HOLD ONTOP HARMLESS FROM ANY SUCH CLAIM OR DISPUTE IN THAT SENSE.

Why is Ontop work the best solution

Ontop is democratizing international recruitment.We offer the smartest way to hire and incorporate talent remotely, automate payments and provide total financial control to your international teams, all on the same high-level platform.

Fredric Oakley
1.500 USD
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Why Ontop