exempt or nonexempt

njjel

We will be employing a person for one month for a special project. They have graduated from law school, but have not passed the bar. They will not supervise anyone and will be supervised by the managing attorney. Would you classify them as exempt or nonexempt and why?

pork1

NJJEL: I would classify the person as "contract labor" for a one time project worth x amount of money and never be concerned about EXEMPT or NONEXEMPT.

Put a simple letter of agreement for control purposes of the quality and time lines for production of parts or whole completion and go with it.

Often when we need a "feed hauling" driver for a week or a day, when one of our employees is out on an unscheduled event, we will call a contract labor driver in and pay the individual by the load for a day or a wek or even more, if justified, rather than the hour.

Just make sure the value is computed to be greater than minimum wage based on the number of hours that you would see this person contributing toward the project. This should prevent any chance of dispute with Wage and hour over the payment for services rendered. A paralegal project with what you have provided should not be difficult to even classify the opportunity as EXEMPT, if you compensate at greater than $455.00 per week.

PORK

Don D

Pork is right. Independent Contractor. Draw up a simple agreement. Don't even put them in the payroll system. Cut them one or more checks with no deductions, send them a 1099 at year's end.

njjel

Unfortunately upper management will not go for that. So I guess I 'm back to my original question. Your thoughts please?

Down_the_Middle

Geeeez......... I-C status is the way to go for this type of arrangement,,,,,,,,but...... The path of least resistance is to employ them on an hourly basis, control the amount of hours that they work (overtime) and view them as casual labor for an defined period of time.

Don D

Non-exempt, hourly in that case. To be such wizards, lawyers sure can be mental midgets at times.

pork1

$27.63 per hour is the current standard test for computer wiz exempt status. Learned professional employees who are paid $455.00 per week are exempt. Primary duty of performing office or non-manual work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction, but which also may be acquired by alternative means such as an equivalent combination of intellectual instruction and work experience. This sounds like an attorney (to be) at work on a special project to me!

If you must enroll the person who has not obtained the right to practice law by virtue of the BAR, but in the legal arena on a special project, then pay the person above the $455.00 minimum and satisfy the leaders and put him on salary. They are lissening to the smart thing to do, so appease them and salary the person for the project and terminate at the end. For all intent and purposes, you will be doing the same thing as contract labor except payroll pays the check instead of accounts payables for services rendered!

PORK

Shadowfax

Don I'd be interested in your thoughts on why this ic need not have insurance. If he is hurt somehow, or hurst others, where is the coverage? W/o his own insurance, ther is no work comp protection. And, one of the IRS 20 part issues is insurance. Teach me, please.

Shadowfax

Not that lawyers need anyone's defense - but in this case they are right. While it would be by far the most practical approach, this position would never hold up under the independant contractor rules. The very concept of 'supervised' by the managing attorney deep sixes the designation before it gets out of the box. Hourly is right.

njjel

OK so we have a difference of opinion (NO!:-) on the question. I'm leaning toward making him hourly even though he is a learned professional and will be making over $455/week. This is because it is a short term project of one month. Any more thoughts or anything else I should take into consideration? Is this maybe one of those instances where it truly could go either way?

pork1

[font size="1" color="#FF0000"]LAST EDITED ON 07-30-04 AT 09:26AM (CST)[/font][br][br]NJJEL: You can never be wrong by placing someone on hourly, but your company may be wasting some really good O/T $0llars that would not otherwise be required for a contract labor agreement.

Being supervised or controlled by the senior partner for guidance and progress reports on the project is simply good business, but it does not trump the contract labor relationship and the agreement to produce a short term product or service.

Got to run and supervise our contract labor washing our barns and shoveling the manure. New babies are on the way and it must be finished to day to allow for the clorox bleach and the Phenol to dry 72 hours so that it doesn't burn their tender little feet.

"Dandy Pork" is coming your way!

Beave

If this person will make more than $8,334 (prorated for the year would exceed the $100,000 hightly compensated threshold)for the month, they might qualify for the highly paid exempt employee.

njjel

No, they are being paid $17.00 per hour.

Don D

If you were to hold a hard and fast line that the person is 'being supervised' by an employee, that might indeed weaken the independent contractor claim. However, if the partner explains the project, rolls out the parameters, clarifies the firms expectations and generally reviews the product of the contractor, that is not supervision, per se. These are other things that would weaken a claim of independent contractor status: complies with employer's instructions about when, where and how to work. Receives training from the employer. Has a continuing relationship with the employer. Follows set hours of work. Must perform the work in a sequence set by the employer. Relies on employer for tools or supplies. Works for one employer at a time. Does not offer like services to others. Can be fired by the employer. Does not invoice the employer weekly.

But, this is rather a useless exercise for us all since your bosses have laid a foot down on independent contractor status for this person.

I suggest that the safest route, albeit probably also the most expensive one, is to pay him on an hourly basis, including overtime for hours worked over 40. That cannot and will not be challenged by any government agency. The other choices open to you just might be or could be, but probably never would be. Ready to flip a coin?

njjel

Sounds good to me and this was my first choice but wanted input from you all as it is ALWAYS worthwhile! As an aside I think to be classified as independent contractor he would need to have his own insurance and of course he does not and is covered by our errors and omissions and liability insurances. But like you said that isn't the point here any longer.

Don D

If he were an independent contractor, it would not be essential that he have his own insurance. Of course that's always wise and best, but not for a one month office intern on a project. The primary beauty of IC status is not having to fool with the payroll system and it's deductions and FICA and such and they don't impact the headcount or UI. They're responsible for all of that stuff on their own.

njjel

I agree in part, but somewhere imbedded in the depths of my brain I seem to recall that one of the issues that the DOL looks for to qualify independent contractor status was that they indeed had their own insurances. (Yes, I know it wouldn't apply in this instance.)

Don D

Actually jel, it's the IRS. They use a form named "IRS 20-Factor Test For Determinimg Employee Status" to determine whether or not there is an employment relationship. Along with that test, there is also the "IRS Indicators Of Independent Contractor Status" test, which includes 10 questions.

Both tests are yes-no questions with the total number of yes responses on both tests leading to the IRS determination. Employers are encouraged to utilize and be guided by these tests in considering whether or not to classify one as an IC.

The matter of insurance coverage does not appear on either test, as that would not directly concern the IRS.