Legal Question in Business Law in California

Re: Employee seeks Additional work as Independent Contractor

Under California Law, that employee will be treated as an employee of yours and will thus be on overtime. California Employment Commission will not separate work done for you and work done outside of your scope of work for him. I speak from experience. A 1099 will not protect you. The State will see the same employer number (you) for the same SS# of the employee and will not allow it.

Should the employee be employed by another company with a different EIN#, I did not find any problems. I was able to find work for these people in this manner.

The law is not favorable for people who want to earn a little extra money and employers nice enough to want to help their employees.

Insurance wise, a truly independent contractor will carry their own workmen's comp and you have a duty to verify that they carry liability insurance. Your insurance company will look very disfavorably on you for risking their converage, and might in fact even deny you coverage for his accident, placing the company liable for his accident.

You did not mention if your company is incorporated or even an LLC but this is when you need those protections.

Re: Employee seeks Additional work as Independent Contractor

As the previous response points out, this is not a good idea. Any attempt to waive liability would be VOID, so forget that angle. You can get excellent free advice about these kinds of schemes from a competent workers' comp insurance agent or broker.