Legal Question in Employment Law in Texas

An issue where a former employee threatened to sue my employer for unpaid overtime recently transpired. I did research and informed my employer that his position, as well as many others, fit within the criteria for common-law employee status, and if he had a decent attorney, he could cause significant trouble. My suggestion was to pay the employee what was owed, and immediately correct the misclassification of other employees, so the issue would not present itself in the future. Now my employer wants me to restructure so that everyone in the company is a contractor: she wants everyone to file for a DBA, and to act as a contractor over their specific functions. The goal is to avoid having to pay for unemployment and worker's compensation insurance. These positions are part of the normal operations of the business, positions that normally would not be contracted. Each employee would still be required to show up to work everyday, and would still use our employees facility and equipment to carry out their job functions. I'm not sure of the legality of doing something like this, and whether it is even possible with many of the positions held at the company: the common-law challenge seems fairly clear cut, and this seems like it cause a significant amount of trouble for my employer if done incorrectly, or if done at all.


Asked on 1/04/11, 11:01 am

1 Answer from Attorneys
Mark Dunn Mark D. Dunn

Tell the employer that she needs to talk to an ACCOUNTANT, someone who is familiar with IRS rules. What your employer is wanting to do will cause problems. If you have someone working for you and you control the details of his work, he is an employee, not a contractor. It's not a good idea to play games with the IRS.

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Answered on 1/09/11, 12:10 pm


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