How To Lose Your Small Business in 10 Days – Day 4

Categories: blog

Peach and Luigi Misclassify the Newly Hired Employees

Yoshi has begun working for Plumbing and Pizza Delivery under his new extremely advantageous contract that has basically assured him employment, no matter what happens. Excited to begin work, Yoshi puts an ad out on Indeed.com and Monster.com and starts recruiting employees that can work either as plumbers or as pizza cooks (or ideally, both!). Yoshi has never been a manger before, so he’s unsure about what exactly to do.  Nevertheless, to impress Peach and Luigi, Yoshi starts bringing in potential employees to interview. In no time at all, Yoshi has a handful of plumber and pizza chefs lined up ready to be hired.  

Again, trying to impress Peach and Luigi, Yoshi beings crunching numbers in attempts to save the company as much money as possible. After doing some google searches, Yoshi learns that a way to save the company money is to classify employees who work outside the company and have some autonomy, as independent contractors. Thinking he’d stumbled upon an innovative loophole to saving money, Yoshi skips background checks and hires the plumbers as independent contractors. After all, the plumbers won’t be coming into an office or specific site each day, they’re just going to the different job sites to get the work done. However, Yoshi ignores the fact that the plumbers are driving around in company trucks with company provided tools and wearing the company uniform. As a result, in only a short period of time, the company has opened itself up to daily liability for, among other things, any damage caused by the workers as well as wages and benefits it owes to each of the plumbers.