Week 1
Assignment: 1
Devry University, Employment Law
Professor Steven Wynne
October 31, 2010
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1. An independent contractor is hired by a company to do a job without the
benefits such as paid t ime off, sick t ime, or any medical coverage the company
may offer to actual employees hired on. In addition, if the employer were to let
t he contractor go, they would be unable to apply for unemployment benefits.
I ndependent contractors are able to employ others in their field as well, and
t hose would be sub contractors. An employee is someone that is hired on
d irectly by the company and will be able to reap the rewards of being able to
have paid vacations and cooperate in medical benefits the company offers. I ts
i mportant to know which employees are contractors and which are employees,
because of liability issues and how they would be compensated. Contractors
a re not taxed on their pay since an IC is the employee and employer, or owner
of their own business. Therefore, in other words and independent contract
w ill receive a 1099 at the end of the year. An employee will be taxed on their
wages every pay period to meet those requirements and will receive a W2 at
t he end of the year.
2. The employee or independent contractor have an obligation to be honest to the
company they are working for. Disclosing any information that they may
k now of that can affect the employer and/or the organization they are working
for show loyalty. I t is also said to be loyal by not working for another company
t hat may be a competitor of the organization the employee or contractor is
currently employed with. A breach in this duty would be if an employee or IC
worked for the competitor part time to earn a supplemental income without
i nforming their current employer and maybe being responsible for any type of
insider t rading.
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The duty to act in good faith is pretty much doing the job or task with the ntentions best
i and using the skills necessary to complete the job. They must follow the
i nstructions given to them as well. A breach in this duty would be if the employee or
i ndependent contractor did not carry out the job the way they were supposed after
careful instruction were given.
The duty to account is not using the funds provided by the company for any personal
r easons. The employee or independent contractor should hold himself or herself
r esponsible for any compensation they have received including any k ickbacks. A
b reach in this duty is if the employee or IC used funds to cover medical costs of their
own or just going out for dinner, which would be dishonest and unethical.
3. The employer should keep certain documents in every employees file such as
t he application or resume, background check, drug test, and/or credit check
r esults. A copy of a photo ID and social security card, emergency contact
i nformation, Equal Employment Opportunity Acknowledgement or any other
company specific forms that were required for the organization such as noncompete agreement.
4. They should find out if what they did was in fact fraud because i t was verbal
and nothing in wri ting, so it may be inconclusive. However, they need to make
sure that this wont hur t their business or make them loose a ton of money. I t
would be in the companys best interest to go ahead and provide those special
u pgrades to the customers that are pursuing legal action since i t was a verbal
agreement in order to prevent a lawsuit.
5. I would advise the employees that even though it was in violation of the
EPPA, i t would be in their best interest to move forward especially if they
have nothing to hide. After all the company they are working for is losing
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money by having this equipment being taken and if they are unable to catch
t he person(s) commit ting the crime everyone could be out of a job soon.