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  1. #1
    Join Date
    May 2018

    Default At What Point Does an Indpendent Contractor Become an Employee

    My question involves business law in the state of: North Carolina.

    Hello everyone,

    I am starting a business with a partner and we have just formed an LLC, and opened up a bank account.

    Our business is an on-site auto repair business. We get calls from people who need an auto mechanic, then we contract a mechanic to go perform the repairs at the person's home, or wherever they are. We take a fee as a percentage for getting the mechanics the job.

    Now, we are starting to contract someone and I'm confused how far our relationship can go as a contractor relationship.

    I know that we cannot:
    • Manage or direct the process of the work that contractor does (we can't tell them how to do it, we can only tell them how the end result should be)
    • Insist that contractor accept jobs during certain times
    • Insist that contractor does not work in relevant field while performing contracting work for us
    • Hire employee to do same work as contractor

    There are some things that I'm not quite sure about though. Here are some other things we've talked about.
    • Contractor wears a uniform with our name on it, but is not required (Uber and Lyft drivers have stickers on their cars?)
    • We occasionally pay for contractors gas
    • We buy a business phone and give to contractor (for contractor to keep in his possession) so that contractor can use the point of sale mobile application
    • We continue to pay monthly phone bill for the phone that contractor is in possession of
    • We occasionally buy tools for contractor
    • We give contractor a bank card with contractor's name on it in order for contractor to purchase parts for for a client's car (Bank suggested this, insisted that it didn't effect a contractor relationship at all)
    • We buy a company van and let contractor drive said van when performing contract work
    • We no longer contract with contractor because contractor was not previously available for work when contractor stated they would be
    • We guarantee a contractor that while contracting with us they will receive a minimum of $xxx per week
    • LLC member (who takes draw from the business) performs same work as contractor

    I guess from what I've read, there's no set point when a relationship is no longer a contractor relationship, and that everything must be considered. That being said, which or how many of these things would we be able to comfortably do without blurring the line between a contractor and an employee, and which of these things should we avoid doing in order to keep out this strictly a contractor relationship?

    Any other knowledge anyone has regarding this would be great as well!

    Thank you,
    - MM.

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