Legal Question in Administrative Law in California

Re: Independent Contractors VS Corporate Officers

Whether someone is an independent contractor or an employee depends upon the facts of their work and their relationship to the company, and their title has little or nothing to do with the employee-contractor determination. Indeed, someone with an officer's title is more likely to be deemed an employee because of the title.

If your question has to do with whether these persons can be excluded from workers' compensation insurance coverage, which is a somewhat different issue than employee-vs.-contractor, you would need to take this up with your insurer, but these proposed officer titles are probably not exempt.

Many businesses are trying to avoid payroll taxes, benefits and workers' comp. insurance premiums by claiming non-employee status for their work force such as "independent contractor" "leased worker" and so forth. The penalties for mis-classifying workers are pretty severe, whether the status claim was a mistake or intentional. Further, the classification rules used by various agencies (IRS, FTB, labor commissioner, courts, etc.) are not consistent from agency to agency or from one job title to another. For example, the rules to determine whether a computer programmer is an independent contractor or employee are somewhat different from the tests used to determine the status of a janitor or an artist.

Your best bet would be to retain a business attorney to assist you in classifying your work force. If you think you can't afford one for this purpose, you are probably mistaken, but at least get a recent book on small-business management and read the chapter on employees and employment laws.