An increasing number of companies, both big and small, are using contractors to fill positions that would traditionally have been held by full-time employees.

While this may provide benefits in the form of saved time and money, using contractors can also pose a significant risk if done improperly. FedEx found this out this hard late last month, when a federal appeals court ruled that thousands of delivery drivers the company had claimed were independent contractors were actually employees, meaning the company may be on the hook for hundreds of millions of dollars in unpaid overtime.

How can you avoid the potential pitfalls of hiring contractors? Here are three legal lessons for employers from the FedEx case:

If you have legal questions regarding the use of contractors, an experienced employment attorney can explain your options and ensure your contractor agreement complies with state and federal law.

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Related Resources:

  • FedEx’s $250M Business Lesson You Can Learn For Free (Inc.)
  • Be Careful When Hiring a Contractor (FindLaw)
  • 3 Tips for Hiring Independent Contractors (FindLaw’s Free Enterprise)
  • IRS Cracking Down on ‘Independent Contractors’ (FindLaw’s Free Enterprise)

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