THE BAIS HAVAAD HALACHA JOURNAL: Volume 5775 Issue XXVII Parshas Acharei-Mos Kedoshim Employee or Independent Contractor? The Halachic Considerations of Hiring By Rabbi Yehoshua Wolfe
As demand for an increased labor force rises, employers must decide whether to hire independent contractors (ICs), who produce goods or provide services but are not integrated into the employer’s business, or employees, who do become absorbed into the employer’s corporation. Hiring ICs is probably more appealing to many because of the financial benefit for the employer: whereas he must pay an unemployment tax (FUTA), workers compensation insurance and a portion of the employee’s Social Security (FICA) and Medicare taxes for each employee, the employer does not have to pay payroll taxes for independent contractors. Hiring ICs, then, relieves the employer from the heavy burden of these expenses. Despite these tax benefits, employers are still left with the question of whether it is worthwhile to employ ICs, and this article will attempt to examine some of the costs and benefits of each position-type within a halachic framework.
As demand for an increased labor force rises, employers must decide whether to hire independent contractors (ICs), who produce goods or provide services but are not integrated into the employer’s business, or employees, who do become absorbed into the employer’s corporation. Hiring ICs is probably more appealing to many because of the financial benefit for the employer: whereas he must pay an unemployment tax (FUTA), workers compensation insurance and a portion of the employee’s Social Security (FICA) and Medicare taxes for each employee, the employer does not have to pay payroll taxes for independent contractors. Hiring ICs, then, relieves the employer from the heavy burden of these expenses. Despite these tax benefits, employers are still left with the question of whether it is worthwhile to employ ICs, and this article will attempt to examine some of the costs and benefits of each position-type within a halachic framework.
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