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How to Manage an Independent Contractor

Independent contractors offer an employer flexibility to meet staffing demands and expertise in areas outside of the employer's business. Like the employers that hire them, independent contractors run their own businesses, set their own schedules, balance conflicting demands and generally work in their own offices without direct supervision. Independent contractors are their own bosses; they are not employees. If an employer manages an independent contractor like an employee, it runs the risk that a governmental agency or a court could reclassify the independent contractors as an employee, resulting in significant financial liabilities.

To manage independent contractors effectively, an employer should set clear expectations about the project's scope, budget and timeline; keep the lines of communication open; and pay independent contractors promptly so that they will want to do business again. An employer should avoid actions that could result in a reclassification of the parties' relationship.

After hiring an independent contractor, an employer should consider following the steps set forth below to manage the independent contractor.

Step 1: Monitor the Independent Contractor's Progress Toward Contractual Goals

The employer should monitor an independent contractor's progress to ensure compliance with contractual terms and deliverables at a level consistent with the employer's quality expectations. That being said, the employer should avoid over-managing the relationship.

For example, the employer should not require that the project be performed in a certain way or that the work be done using specific equipment or tools. The employer should not require specific progress or status reports (e.g., daily or weekly). The employer also should refrain from limiting the independent contractor's ability to delegate tasks to other workers and from requiring that the work be done by a specific individual.

Step 2: Keep Track of Project Deadlines, But Not the Independent Contractor's Hours

Independent contractors do not necessarily work like employees. They may work at scheduled times according to their needs, or they may work all night under the pressure of a deadline. The employer should trust the independent contractor to perform the project and avoid tracking the independent contractor's hours or requiring the independent contractor to work at specific times.

Nevertheless, to ensure that the project is moving forward in a timely manner, the employer should schedule project delivery deadlines and follow up with the independent contractor if they are not met.