Frequently Asked Questions - Coastal HR Consulting

How do I know whether my workers qualify as employees vs. contractors or consultants?

One important starting point is that that the IRS and CA assume that a worker is an employee unless proven otherwise. California ruled that a worker could only be an independent contractor if each of these three factors was met:

The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
The worker performs work that is outside the usual course of the hiring entity’s business.
The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

What if we do not qualify workers correctly?

Civil penalties of between $5,000 and $25,000 for each willful misclassification of an independent contractor. Misclassified employees can also seek back pay for unpaid wages or overtime, premiums for meal and rest breaks, or pursue a claim to enforce civil penalties under California’s Private Attorneys General Act.

Why should I hire an HR consultant? Or should I just hire and HR employee?

HR functions and needs vary depending on the size and dynamic of the business. As a consultant, we can help you make this important distinction and save you the hassle of not only hiring someone but also the liability associated with that process.

What are the most important things we should we know before we terminate an employee? And what should be considered before we hire someone?

Uniform enforcement of the rules is key. Whether you are terminating that employee for time and attendance issues, or performance, you as the employer need to show that you have a system in place to track and uniformly enforce these measures. If not, the employee can seek unemployment benefits, which will end up costing you $$$.

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