Employment Agreements and Independent Contractor Agreements

Employment Agreements and Independent Contractor Agreements

Employment at Will

Most employer/employee relationships in New York State are considered “employment at will.” Generally this means that unless there is a written employment contract, or a union contract, the employer can generally fire the employee without cause. Similarly, the employee can leave the job without fear of being liable for money damages for not continuing the employment. Although employers may not discriminate against employees based upon race, religion, age, sex or other protected classifications, the employment at will can be terminated for most other reasons. A written employment contract can dramatically change these terms.

Employee or Independent Contractor?

Generally, an employer must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. By contrast, an independent contractor is legally responsible to pay his or her own income taxes, Social Security and Medicare taxes, since there are no payroll deductions.

The independent contractor does not enjoy the fringe benefits that employees regularly receive; such as sick leave, vacation pay, health insurance, retirement benefits, or workers compensation coverage.

The Internal Revenue Service cautions that business owners must correctly determine whether the people providing services are employees or independent contractors. The IRS is suspicious of independent contractor agreements which might attempt to incorrectly designate an employee as an independent contractor.

In determining whether a worker is an employee or an independent contractor, the following are some guidelines to consider:
•If there is a signed written agreement that identifies the worker as either an employee or an independent contractor, that may have some relevance in determining the true nature of their legal relationship. Keep in mind however that the Department of Labor and the Internal Revenue Service will not simply accept the parties’ written agreement as conclusive proof of the nature of their legal relationship.
•If the “employer” for whom the services are provided maintains supervision, direction and control over the worker, that suggests that the worker may be an employee, rather than an independent contractor.
•If the “employer” provides fringe benefits to the worker, such as sick leave, vacation pay, health insurance, retirement benefits, or workers compensation coverage, that suggests that the worker may be an employee, rather than an independent contractor.
•If the worker owns his or her business, and provides the services through that business entity to several “employers”s or clients, that suggests that the worker may be an independent contractor, rather than an employee.
•If the worker has the right to control the manner of the work, time of work, location where the work is performed, and the methods utilized to accomplish the work, that suggests that the worker may be an independent contractor, rather than an employee.
•If the worker brings his or her own tools and equipment to the work site, that suggests that the worker may be an independent contractor, rather than an employee.
•If the company provides all the tools and equipment, or provides an office for the work to be performed, that suggests that the worker may be an employee, rather than an independent contractor.
•If the worker provides work, labor or services for many“employers”s or clients, that suggests that the worker may be an independent contractor, rather than an employee.

Please keep in mind that these are only some of the factors that the IRS will consider in determining whether a particular person providing services is an employee or an independent contractor.

Employment Agreements Protect Employees

We strongly believe that a carefully negotiated and drafted written and properly executed employment agreement is the employee’s best assurance that the employment relationship will fulfill the employee’s expectations. Often the employee would not have accepted the employment offer, if not for particular promises made by the employer. The written employment contract protects the employee, in the event that the employer later denies having made those promises, or fails to fulfill the employer’s obligations in accordance with the parties’ oral agreement.  In some instances, the New York Statute of Frauds may require that the employment agreement be in writing.  Even if the Statute of Frauds does not apply to your employment situation, it is much more difficult to enforce an oral employment agreement as compared to a written and properly executed employment agreement.

Employment Agreements Protect Employers

When a “employer” hires a worker either as an employee or as an independent contractor for a project, the employer has legitimate interests, such as insuring that the employee or independent contractor will not terminate the employment or contractual relationship before the project or anticipated term is completed. The employer also wants to insure that the worker’s fees will continue through the agreed term at the agreed fees or daily, weekly or annual rate of compensation.

We believe that the written employment contract is the employer’s best protection against a rogue employee who might otherwise try to divert the employer’s clients or customers to another company, such as a new company formed by the employee after terminating the employment relationship.

Confidential information and documents (whether computer files or physical documents) such as  client or customer lists, and other highly sensitive proprietary information, are extremely valuable to the employer, and should be properly protected from misuse by a disloyal employee.

Conversely, the employment agreements lawyer needs to make sure the employer understands that if the employment agreement unfairly prevents the employee from being employed at another company after leaving the employer, New York courts might refuse to enforce those provisions of the employment agreement.  Employers who insist on restrictions that are too burdensome on the employee run the risk of creating unenforceable provisions in the employment agreement.

Properly drafted employment agreements, independent contractor agreements, partnership agreements, shareholders’ agreements or operating agreements may address these issues, as well as other important terms of the relationship.  It is important to avoid ambiguous provisions, which will not achieve the intended protection, and instead increase the chance of a lawsuit.

Independent Contractor Agreements

Employment Agreements and Independent Contractor Agreements

If you are a lawyer, accountant, architect, etc., or other professional who is providing services as an independent contractor, you are probably providing professional services to many clients. When you accept a temporary, part-time, or other non-employment assignment, you and each of your clients have responsibilities and obligations, such as the parameters of the services to be provided, compensation and payment terms.

If there is no signed written agreement expressing a clear understanding as to each parties rights and obligations, what will the parties refer to if a misunderstanding or disagreement occurs? Unresolved disputes may lead to undesirable results such as non-payment, early termination by either party, the “employer”’s requests for unanticipated additional services without additional compensation, or the independent contractor’s requests for additional compensation which the “employer” did not anticipate, and considers to be unreasonable. Our experience supports our belief that a carefully negotiated and drafted independent contractor agreement is the best protection fo

Medical “Partnership Agreements”

When a worker joins a professional practice, such as a law firm, accounting firm, architectural firm, etc., as a partner, or if the worker’s employment matures into a partnership, it is even more important that the parties enter into a written agreement that defines each party’s rights and responsibilities. If the worker is acquiring an equity interest in the professional practice, the agreement will be more comprehensive than the agreement for the worker who is an employee of the professional practice. In addition to the provisions applicable to an employment relationship, the partnership agreement should also include “buy-sell” terms, such as provisions regarding voluntary sale of a worker’s equity interest in the professional practice, and provisions relating to retirement, disability, death, etc. Depending on the legal status of the professional practice (Partnership, Limited Liability Partnership, Professional Corporation, or Limited Liability Company), the agreement may be a Partnership Agreement, Shareholders’ Agreement, or Operating Agreement.

Carefully Negotiated and Drafted Employment Agreements

Our New York Employment Agreements Lawyer skillfully negotiates & drafts Employment Agreements and Independent Contractor Agreements to protect the legal rights of our clients. We believe that this is the best way to substantially increase the likelihood of a successful employment relationship, and minimize the possibility of misunderstandings escalating into legal disputes or litigation. Whether we are representing the employer or the employee, we strive to achieve a comprehensive written employment agreement.

We strongly believe that every lawyer, accountant, architect, or other worker who is an employee, independent contractor, partner, shareholder or other equity owner of an interest in a professional practice, and every employer or professional practice contracting with employees, independent contractors or partners should be protected by a carefully negotiated and drafted employment agreement, independent contractor agreement, partnership agreement, shareholders’ agreement or operating agreement.

Provisions in Your Employment Agreement

Many employees will enter into one or more employment agreements during their careers. It is important that the worker be represented by a lawyer who is experienced in negotiating and drafting employment contracts. The worker’s employment agreement should include various provisions, such as :

Term of the Employment Agreement

The employment agreement should state the term of the agreement, including the beginning and ending dates of employment.

Duties and Responsibilities

The employment agreement should describe the worker’s duties and responsibilities to the employer, the locations where the worker will be required to perform services, the number of days and hours the worker will be required to work, and the worker’s other responsibilities.

Termination of the Employment Agreement

The employment agreement should specify those events that would give either the employee or the employer the right to terminate the agreement before the end of the term.

Compensation

The employment agreement should state the monetary compensation that the worker will receive. This may include a base salary, commission, percentage of profits, and bonus based on objective performance standards.

Paid Vacation, Medical Insurance and Other Fringe Benefits

In addition to the worker’s salary and other compensation, the employment agreement should clearly state the fringe benefits that the worker will receive, such as paid vacations and sick leave, medical, dental and eye care insurance, life insurance, disability insurance, and retirement plan.

Restrictive Covenants

The employment agreement may include some restrictive covenants limiting the worker’s permissible future employment and self employment activities within a specific geographic location, after the expiration or earlier termination of the employment agreement. Restrictive covenants should be carefully reviewed by an experienced employment contracts attorney, and negotiated as to geographic area, length of time and other factors, in order to ensure that the non-compete provisions will not unnecessarily hamper the worker’s employment opportunities after expiration or termination of the employment agreement. Non-solicitation of the employer’s clients or customers, as well as non-disclosure of confidential information are also typically requested by employers.

Legal Help With Your Employment Agreement

To discuss your Employment Agreement or Independent Contractor Agreement, we invite you to complete our Questionnaire, or click Contact Us to send an email. You may also call Michael W. Goldstein to discuss your Employment Agreement, or to schedule a consultation at our office.

Employment Agreement Disclaimer

Visiting our website, submitting any information via questionnaire or email, or discussing your case with us does not create an attorney-client relationship. An attorney-client relationship with our law firm can only be established with the signing of a written retainer agreement prepared by our law firm.

Prior results do not guarantee or predict a similar outcome with respect to any future case or legal matter.

Our website contains general information to assist our visitors in understanding various aspects of New York Employment Agreements, NY employment contracts, New York independent contractor agreements, NY partnership agreements, NY shareholders’ agreements, NY LLC operating agreements, New York employment law, New York commercial law, New York commercial litigation, NY business law, and NY contract law.

The information contained in this website is not intended to constitute legal advice, nor to create an attorney-client relationship or lawyer-client relationship. We recommend that you discuss your Employment Agreement with a New York employment contracts lawyer, New York employment law attorney or NY business lawyer promptly.

This website is not intended to solicit clients for employment contracts, independent contractor agreements, employment law, litigation of employment law disputes, or any other contract lawsuit or legal matter outside of New York State.

Law Offices of Michael W. Goldstein is a NY Employment Agreement attorney, New York contracts lawyer, business lawyer and commercial law firm representing clients in negotiating, drafting and interpreting New York employment contracts, New York independent contractor agreements, NY partnership agreements, and numerous types of business and commercial contracts. We represent diverse workers, professionals and other clients in various legal matters involving employment agreements, independent contractor agreements, partnership agreements, commercial and business transactions, commercial litigation, and employment law litigation throughout New York State, including New York City, Manhattan, Bronx, Brooklyn, Queens, Staten Island, Long Island, Nassau County, Suffolk County, Westchester County, Rockland County and upstate New York.

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