Part 1: Background Facts: You and Winnie, and Ralph discuss Clean’s plan to hire George Tacy as an agent for recruitment and hiring computer/IT employees. You all recognize the importance of having a clearly defined agency agreement, and there are different types of agents.
An agency agreement can be defined as a legal contract, which creates a trustee relationship (“definition of principal vs. Agent”). The first party reaches an agreement with the second party stating that the second party’s actions bind the first party to all later contracts, which are made by the second party as if the first party had himself or herself personally made the later agreements in question. The power of the second party to bind the first party is legally known as an authority (“definition of principal vs. Agent”). An agency made through an agreement can be a form of implied authority. An example is when a person hands out their credit card to a friend or relative. Therefore, the cardholder is expected to pay for all transactions made by the relative or friend using the credit card. This means having a person as an independent contractor is better than having them as an employee.
The decision made to hire Tacy either as an independent contractor or as an employee for Green Clean (GC) is fully dependent on the amount of obligation and control that GC is looking for in the agent relationship. It is also very crucial to have a well-explained agreement (“definition of principal vs. Agent”). This means that identifying Tacy as an independent contractor or an employee will not determine the status. Instead, his status is based on the contents of the agreement, control exercised over Tacy’s tasks, withholding of taxes, equipment provided, and compensation agreement. Some bureaus also support this by saying that signing’ independent contractor’ forms do not automatically make the person an independent contractor, mainly when the situational facts make the signee an employer.
An independent contractor is defined as a person who agrees with a second party to do something without the second party having control over them (“Agency,”). This means that the independent contractor works as a non-emloyee and needs to pay for their medical taxes and social security. This means that if GC decided to hire Tacy to work as an independent contractor, they would not be liable for social security, payroll taxes, compensation premiums, or any other benefits that the employees of the company may be enjoying as Tacy would now be legally independent unlike if he was an employee of the company (“Agency,”).
Hiring Tacy as an independent contractor to help in the recruitment of computer/IT employees would also put the organization in a strategic position, which would give them an advantage. This is because GC may not require the permanent employment of the experts being recruited. Although GC will not fully control Tacy, they can easily express certain circumstances where the agency agreement could quickly be terminated. For example, adding an expiration after a period that was fixed or the introduction of a revocation of an agency clause would put GC in a position where it could terminate the agreement if it were not satisfied by the services offered by Tacy (“Agency,”). By hiring Tacy as an independent contractor, it will be easy for the company to make him an employee if they wish to do so or change. Hiring her to be an independent contractor after hiring her to be an employee, on the other hand, would be challenging, which is why I suggest that Tacy should be employed as an independent contractor.
Agency. (n.d.). Encyclopedia Britannica. https://www.britannica.com/topic/agency-law
The definition of principal vs. Agent. (n.d.). Work – Chron.com. https://work.chron.com/definition-principal-vs-agent-14381.html
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