Key Factors for Determining Contracts

Key Factors for Determining Contracts

INTRODUCTION

Consider what you have learned about employment laws and federal   regulations governing employment, particularly regarding the   distinctions between independent contractors and employees and how   business is conducted with each. Read the scenario below.

Scenario

Madrid and Berne is a top-rated accounting firm with offices in   Phoenix and Tucson. Madrid and Berne wanted to provide bookkeeping as   an additional service to its clients. It hired Joan Newman Business   Services, with offices in Phoenix, Flagstaff, Tucson, and Yuma, to   perform contract bookkeeping services for Madrid and Berne clients who   requested and needed such services.

Madrid and Berne entered into an   independent contractor agreement with Joan Newman Business Services.   The contract stated that Joan Newman is an independent contractor and   agrees that her business is an independent contractor of Madrid and Berne.

After entering into the agreement, Joan worked solely on jobs   assigned by Madrid and Berne and was paid a commission for the work.  

 The commission was based upon the fees determined by Madrid and Berne   and paid by the clients to Madrid and Berne. Joan was paid on a weekly   basis. She used available and unused office space at Madrid and Berne,   along with Madrid and Berne’s equipment and supplies. This arrangement   made it easier for clients to utilize Joan’s services and be familiar   with the offices. Madrid and Berne reviewed Joan’s work and returned   faulty work to her for corrections before delivering the completed   work to the clients.

Assignment

In a 500-750 word paper, apply what you have learned about the   distinctions between employees and independent contractors to the   scenario by discussing the following.

  1. Provide an explanation of why it is important to know the     distinctions between employees and independent contractors when     operating a business.
  2. Discuss the key factors for     determining Joan’s employee classification using the concepts that     have been presented so far in the course and your own research     relevant to the scenario.
  3. Using the rules for     distinguishing between employee and independent contractor, discuss     whether Joan’s designation as an independent contractor was correct,     and justify your designation by citing laws and federal   regulations.
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