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Rehiring employee as independent contractor
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Rehiring employee as independent contractor
Discuss workforce management, performance management, retention, communication, motivation, contributing to business results and other topics.
We are terminating an employee (IT Manager) and there will be  a two week gap between his termination and the new hire start date.  The former employee is willing to return to train and tran
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Rehiring employee as independent contractor

posted at 2/2/2012 6:30 PM EST on Workforce Management
Posts: 1
First: 2/2/2012
Last: 2/2/2012
We are terminating an employee (IT Manager) and there will be  a two week gap between his termination and the new hire start date.  The former employee is willing to return to train and transfer as much information as possible to the new hire, but would like to do so as an independent contractor.  The rules seem ambiguous.  Can we hire him as an independent contractor?  He won't have other clients, but he would be hired with a purpose and responsibilities outside of his normal job responsibilites.  He would have autonomy in many respects, but would be working collaboratively with the new hire.
Thanks for any guidance-especially applicable citations.

Re: Rehiring employee as independent contractor

posted at 2/3/2012 7:56 AM EST on Workforce Management
Posts: 148
First: 9/20/2011
Last: 12/12/2012

With the usual disclaimer about tax advice I offer the following thoughts :-))............

I recall that there are specific IRS rules about this and it used to be called "the same desk rule". Most companies I have talked to require a minimum break of 6 months before they bring back a former employee as an independent contractor.

Beyond that there is the "smell test":

1. No other customers
2. Your workplace
3. Your tools
4. You set the workhours and how you want the work done

etc. etc. NOT an independent sounding arrangement.

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be be done and how it will be done.

Re: Rehiring employee as independent contractor

posted at 2/3/2012 9:42 AM EST on Workforce Management
Posts: 127
First: 9/21/2011
Last: 11/12/2012

From your message it sounds like it is the company's wish to terminate his employment rather than leaving on his own. Sounds like the company did a bad planning job and is now scrambling to make something happen and is in a bad negotiating position. 

But I have to agree with Howard. In essence this person will be doing the same job with the same responsbilities as before, just training someone to do it. He was an employee before and the new person will be an employee afterwards.    I don't think this one passes the smell test unless he is leaving to start up his own IT consulting business and you are his first customer.   I am assuming that he is wanting to charge you higher rates for being an IC since you wouldn't be paying benefits/taxes. And because he thinks he has you over a barrel, which he might.

The better option would be to move his termination date out by those two weeks and pay him some type of serverance/bonus to stay through those two weeks.   However, I have never found employees to have a good attitude on training their replacement when they themselves have just lost their job.

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