Define the Terms Employee and Independent Contractor. Why Is the Status as Employee or Independent Contractor Important?

1. Define the terms employee and independent contractor. Why is the status as employee or

independent contractor important?

Employee: A person who is hired to provide services to a company on a regular basis in

exchange for compensation and who does not provide these services as part of an

independent business (INFO 1)

Independent Contractor: is an individual hired by an employer to perform a specific task

(Moran, pg 5).

Employers do not want to violate the Fair Labor Standards Act (FLSA). Employers need

to know the difference in order to correctly compensate workers for hours worked

whether its standard hours or over time employment. Failure to pay employees who are

exempt is a violation of the FLSA. Independent contractors are paid on case by case

services rendered.

2. Define the employee's duty of loyalty, duty to act in good faith and duty to account. Give an example of a breach of each duty.

Duty of Loyalty: the relationship between employers and employees or independent contractors is a fiduciary one, based on trust and confidence (Moran, pg 11).

Example: Giving away information to a competitor of a newly released product in order copy and produce in a competitive retaliation.

Duty to Act in Good Faith: An employee or independent contractor has the obligation to perform all duties in good faith. An employee or independent contractor must carry out the task assigned by using reasonable skill and care (Moran, pg 15)

Example: Making the decision to purchase a service or product without the employers knowing. The employee or independent contractor did not have the authority to do so by the employer.

Duty to Account: an employee or independent contractor has the duty to account for compensations received, including kickbacks (Moran, pg 15).

Example: Using funds from an account by the employer to purchase a car with the employer's monies.

3. What records must an employer keep with regards to its employees?

For New York:

New York law requires all employers to maintain preserve payroll records that show hours worked, gross wages, deductions and net wages, for at least three years. New York employers must also maintain records to show complete compliance with the law or applicable wage orders governing minimum wages. Employers must keep the following records for a minimum of six years:

* Weekly