Law

This benchmark assignment assesses the following competency.

Competency 4.1: Define relevant laws and regulations that affect the business environment and how businesses operate.

The purpose of this assignment is to identify ethical issues associated with employee designations and to identify laws and federal regulations governing employment.

Review the Madrid and Berne scenario that you used as the basis for your Topic 6 discussion of the laws and federal regulations governing employment. Consider the ethical issues and dilemmas the scenario creates for Madrid and Berne and Joan Newman.

Scenario

Madrid and Berne is a top-rated accounting firm with offices in Phoenix and Tucson. Madrid and Berne wanted to provide bookkeeping as an additional service to its clients. It hired Joan Newman Business Services, with offices in Phoenix, Flagstaff, Tucson, and Yuma, to perform contract bookkeeping services for Madrid and Berne clients who requested and needed such services. Madrid and Berne entered into an independent contractor agreement with Joan Newman Business Services. The contract stated that Joan Newman is an independent contractor and agrees that her business is an independent contractor of Madrid and Berne.

After entering into the agreement, Joan worked solely on jobs assigned by Madrid and Berne and was paid a commission for the work. The commission was based upon the fees determined by Madrid and Berne and paid by the clients to Madrid and Berne. Joan was paid on a weekly basis. She used available and unused office space at Madrid and Berne, along with Madrid and Berne’s equipment and supplies. This arrangement made it easier for clients to utilize Joan’s services and be familiar with the offices. Madrid and Berne reviewed Joan’s work and returned faulty work to her for corrections before delivering the completed work to the clients.

Assignment

Consider and apply the feedback provided by your instructor regarding your discussion of the following in your Topic 6 assignment submission. Evidence of revision will be assessed and should be evident.

Provide an explanation of why it is important to know the distinctions between employees and independent contractors when operating a business.
Discuss the key factors for determining Joan’s employee classification using the concepts that have been presented so far in the course and your own research relevant to the scenario.
Using the rules for distinguishing between employee and independent contractor, discuss whether Joan’s designation as an independent contractor was correct, and justify your designation by citing laws and federal regulations.
In an additional 250-500 words, discuss the following from a Christian worldview perspective.

One ethical issue or dilemma the scenario presents for Madrid and Berne and strategies for addressing the issue or dilemma.
One ethical issue or dilemma the scenario presents for Joan Newman and strategies for addressing the issue or dilemma.
Submit the final 750-1,000 word analysis of the scenario to your instructor.

Prepare this assignment according to the guidelines found in the APA Style Guide, located in the Student Success, Center. An abstract is not required.

This assignment uses a rubric. Please review the rubric prior to beginning the assignment to become familiar with the expectations for successful completion.

You are required to submit this assignment to LopesWrite. Refer to the LopesWrite Technical Support articles for assistance.

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ANSWER

Laws and Federal Regulations Governing Employment

Explain why it is important to know the distinctions between employees and independent contractors when operating a business.

Employees are covered by labor laws while independent contractors are not covered by them. Therefore, a business must establish whether their workers will be subject to labor laws or not. This is essential in establishing possibilities of liabilities that a company can face for failing to follow federal law on employees. Since tax documentations for employees differ from those needed for independent contractors, businesses must establish the level of tax liability that they will incur. There specific working conditions that businesses are legally required to offer employees yet independent contractors operate on their own and are not subject to employer control. Businesses must understand what strategies they must put in place to address all required conditions for employees and independent contractors (de Flamingh & Hogan, 2019).

Discuss the key factors for determining Joan’s employee classification using the concepts that have been presented so far in the course and your research relevant to the scenario.

Behavioral Control

The extent of behavioral control that a business has on a worker determines whether they are independent contractors or employees (Nielsen et al., 2010). While employees are instructed on when and where to do the workers, independent contractors are not an instructor in this manner. Employees are issued instructions on how to complete their tasks while independent contractors are only given general roles to play while it is upon them to complete the fine details of the task given. Employees are evaluated by employers while independent contractors are not subject to detailed evaluation and recommendations of corrections by the employers (Nielsen et al., 2010).

Financial Control

Financial control is a key factor in determining the level of control that a worker has and an employer has. For independent contractors, there is much freedom on how they handle their finances and pay their taxes directly to the federal authorities. Independent contractors pay their taxes directly to IRS while employees rely on their employers to deduct and send their taxes to the IRS (de Flamingh & Hogan, 2019).

Relationship

The longevity and specific terms of a contract determine whether an engagement is an independent contract or employer-employee. Contract details can direct whether the engagement is an independent contract engagement or not.

Using the rules for distinguishing between an employee and an independent contractor, discuss whether Joan’s designation as an independent contractor was correct, and justify your designation by citing laws and federal regulations.

Madrid and Bernie controlled most of Joan Newman’s duties making her designation as an independent contractor unrealistic. According to federal employment laws, employees have more financial and behavioral control from their employers than independent contractors. Independent contractors have opportunities to engage other companies while employees are subject to employer control and usually are attached to one company at a time. However, Joan who is listed in the contract as an independent contractor only works for Madrid and Berne, therefore, going against the federal employment laws. Joan uses the equipment, office space, and supplies from Madrid and Berne in violation of independent contractor regulations required by federal law. Independent contractors operate in their officer spaces, use their equipment and supplies. This is the exact opposite of what Joan has been subjected to. Madrid and Berne control how Joan does her work and even recommends corrections. This goes against federal labor regulations that do not list independent contractors as under much control by employers (Dau-Schmidt, 2017).

One ethical issue or dilemma the scenario presents for Madrid and Berne and strategies for addressing the issue or dilemma

One ethical dilemma that the scenario presents to Madrid and Bernie is whether they need to relist Joan Newman as an employee instead of an independent contractor. The particulars of Joan’s working environment and conditions indicate that she is an employee yet in the engagement document signed, Joan is designated as an independent contractor. Listing Joan as an independent contractor relieves Madrid and Berne from the commitments that an employee would demand in terms of payment, duration of engagement, liability, and other employment laws. However, denying Joan her rights that she should enjoy as an employee of the organization when she delivers just like an employee would pose an ethical dilemma (Ljungholm, 2019). A Christian would advocate for justice and fairness and if Joan’s work terms indicate that she is not getting a fair deal, then Madrid and Berne have a serious ethical issue at hand.

To address this ethical issue, Madrid and Bernie should reconsider the contract details of Joan Newman and either categorize her according to her terms of delivery as required under the law. Alternatively, Madrid and Bernie may decide to stick with the current independent contractor contract and allow Joan to operate by the book as an independent contractor without breaching any single requirement. This would ensure she stops working from the premises of Madrid and Berne and takes a break from working solely on the orders from the company.

One ethical issue or dilemma the scenario presents for Joan Newman and strategies for addressing the issue or dilemma

Joan Newman has an ethical dilemma bordering whether she can take Madrid and Berne’s clients and make them her own. As an independent contractor who has direct contact with the clients of Madrid and Berne, Joan has an ethical dilemma on whether to take the company’s clients and serve them under her company thus depriving Madrid and Berne of their clients. Joan works within the premises of Madrid and Berne and uses the resources of this company to complete her task. However, she has the ability to offer these similar services in her branches located in Phoenix, Flagstaff, Tucson, and Yuma. She can simply redirect these customers to seek services from these outlets and deprive Madrid and Berne of their customer base. However, as a Christian, this poses an ethical issue since Joan signed a contract to serve customers via Madrid and Bernie and not take them for her own and drive them away from the company (Ljungholm, 2019).

Madrid and Berne seem to be having a fair share of customers yet a fewer number of employees to handle their client base. Joan Newman can address this dilemma by either trying to strike a formal agreement with Madrid and Bernie to offer her some of its client bases. This is can be hard to achieve since no company wants to lose customers to another company. Alternatively, Joan can decide to forego customers allied to Madrid and Bernie and seek her independent client base without interfering with Madrid and Berne (Ahsan, 2020). A contractor has the freedom to engage with other companies rather than getting tied to one company alone. When one gets tied to one company alone, they are more of an employee than an independent contractor. The commission that Joan was pad was determined by Madrid, giving the company control over the compensation that Joan had for work done.

References

Ahsan, M. (2020). Entrepreneurship and ethics in the sharing economy: A critical perspective. Journal of Business Ethics, 161(1), 19-33.

Dau-Schmidt, K. G. (2017). The impact of emerging information technologies on the        employment relationship: New gigs for labor and employment law. U. Chi. Legal F., 63.

de Flamingh, J., & Hogan, A. (2019). Employment law: A day in the life: Federal court takes       personal leave back to basics. LSJ: Law Society of NSW Journal, (60), 74-75.

Ljungholm, D. P. (2019). Are the Workers in the On-Demand Economy Employees, Independent             Contractors, or a Hybrid Category?. Linguistic and Philosophical Investigations, (18),      119-125.

Nielsen, L. B., Nelson, R. L., & Lancaster, R. (2010). Individual justice or collective legal             mobilization? Employment discrimination litigation in the post civil rights United             States. Journal of Empirical Legal Studies, 7(2), 175-201.