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Archive for March, 2011|Monthly archive page

Hiring ICs v. Employees – Social Media Interns?

In Entrepreneurs and Social Media, Technology Issues and the Law on March 2011 at 6:44 pm
For social media work, companies often bring on individual talent as independent contractors, freelancers or contract workers for purposes of flexibility and lack of red-tape. However, there are fine distinctions between who qualifies as an employee as opposed to contract/freelancers – and not understanding those distinctions can cause companies time and money in fees to the New York State Department of Labor and the Worker’s Compensation Board.

The New York State Department of Labor differentiates between Independent Contractors and employees as a matter of degree:  the greater the degree of supervision, direction, and control the employer holds over the hire, the less likely that individual can be classified as an Independent Contractor. The choice of classification bears on the amount of taxes and liability the employer must pay.

There is no bright line to distinguish the two and companies are left with the burden of determining the status of hired individuals on a case-by-case basis.

So how can an company protect themselves and understand the fine distinctions?

Generally, Independent Contractors are in business for themselves. They are outside hires who themselves control the manner in which services are provided.  To classify an individual as an Independent Contractor, a company must show lack of employer control on their part.  Before classifying someone as an Independent Contractor – ask:

(1) Do you dictate the manner in which the service is carried out?
(2) Do you provide the tools necessary to complete the service?
(3) Do you directly supervise the service?
(4) Who sets the rate of pay?
(5) Are you able to evaluate the services rendered?
(6) Does the individual need prior permission for any absences? 

These questions will help determine your liability when choosing the appropriate classification.

Companies often choose to classify individuals as Independent Contractors because, generally, an employee is more expensive than an Independent Contractor. For an employee, employers must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes on employee wages, none of which are they responsible for in the case of an Independent Contractor.

However, those initial savings may create issues down the road – especially if a former Independent Contractor chooses to petition the DOL for unemployment benefits as a past “employee” of your company.  This may trigger a swift audit, and companies are often held liable for that worker’s employment taxes and workers compensation violation – combined with a potential substantial fine depending on whether you have a reasonable basis for having misclassified the worker.

As a rule, ensure that anyone working with you signs a comprehensive contract – whether it’s a partner, an employee, an Independent Contractor or a vendor.  Without a contract, these problems became much more difficult to sort through.

Are you an entrepreneur?  Check out “Getting Funded: Making Your Business Investment Readyhttp://t.co/BEpdy9B – March 31, 2011 in New York City.

by: Benish Shah, Esq. & Sheheryar Sardar, Esq., Sardar Law Firm LLC*

For more information on contract law, contact: Sardar Law Firm at sardar@sardarlawfirm.com.

Follow Sardar Law Firm on Twitter: @sardarlawfirm

Research assistance provided by Dave Shorten.

 

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Corporate Social Media: Why Adoption Must Be a Collaborative Endeavor

In Social Media on March 2011 at 4:20 am

Corporations tend to fragment specific tasks, and for good reason. Efficiency requires structural fragmentation, a calibrated process to move along something as complex as a large company, a living organism complete with working parts.  Each department has its mandate and performs within the bounds of its directives, whether it’s marketing, compliance, communications, or accounting. But, as proven studies have shown that companies require cross-departmental collaboration to harness competitive innovation, such is the magic formula for also harnessing the exponential power of social media.

Some executives believe social media is merely a fad, a tool that inherently knows no bounds and therefore cannot be controlled. Others perceive a nominal value in its use and delegate it to the marketing or public relations department. Neither approach captures the potential of a company’s ability to leverage social media to fit its purpose. Leveraging social media is an operational mechanism, not merely a marketing tool. Every department and all levels of a company must engage collaboratively to facilitate and market its products, services and ethos. Social media is another channel to facilitate such collaboration. It provides each layer of a company, including the C Suite, an opportunity to engage internally and externally with its vendors, customers, advisors, stakeholders and constituents. If deployed strategically, social media can transform and export the brand of a company, changing an entire audience’s perception.

This doesn’t merely apply to technology or consumer or retail; traditional professional services such as banking, law and finance can benefit from sophisticated, yet regulated, use of social media as a means to improve corporate image, find client referrals, or opine about a large merger to showcase professional prowess on a truly democratized platform.

The advent of social media should not be taken as antagonist to corporate culture. Every company’s strategic arsenal should include social media as an organic dialogue to further embody the spirit and letter of its purpose. There is no company in the world that doesn’t include in its purpose a quality-oriented focus, whether the company is a service provider or a product developer. Social media must be weaved into the company culture as an expression of what the company does well – what it’s known for.

Social media however cannot be compartmentalized. Social media must be diffused across internal corporate barriers, yet involve each division in its implementation. Corporations are inherent social aggregators that must connect to its audience in a relevant way. Social media is a natural extension of that, carrying the message with even more visibility and impact than traditional media to a niche, but highly engaged and loyal audience. And it’ll cost less.

by: Sheheryar Sardar, Esq., Sardar Law Firm LLC

Are you an entrepreneur?  Check out “Getting Funded: Making Your Business Investment Readyhttp://t.co/BEpdy9B – March 31, 2011 in New York City.

For more information on social media law, contact: Sardar Law Firm at sardar@sardarlawfirm.com.

Follow Sardar Law Firm on Twitter: @sardarlawfirm

Follow Social Media Legalat:@socialmedia_law