Background Facts)You and Winnie and Ralph are discussing 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.

 

1) Analyze and recommend whether Tacy should be an employee of Clean or an independent contractor? Explain why.

 

2) Think about Clean's business purpose and the types of employees Tacy is hiring (IT staff). Would the hiring be a longer-term or shorter-term assignment? If shorter-term, would it be easier/more flexible to have Tacy as an employee or IC?

 

3) If an employee, would it be prudent to hire Tacy, let him go when one wave of hiring is complete, and then rehire him as needed when IT positions need to be filled? Is there any risk with the hire/let go/rehire scenario?

1. Tacy should be hired as an independent contractor.

2. The hiring of IT staff will be a shorter term assignment. 

3. It wouldn't be prudent to hire Tracy and let him go when one wave of hiring is complete and then rehire when needed. 

Step-by-step explanation

1. Tacy should be hired as an independent contractor. The decision to hire Tacy as an independent contractor or employee is dependent on how much control and obligations the company wants in the agency relationship. In this case, with the fact that Tacy will be hired for the specific activity of recruiting and hiring computer /IT employees, it is recommended that Tacy be an independent contractor. Tacy will be operating under the precincts of a clearly defined agreement with the Clean and therefore, it would mean that Tacy will be regarded to be legalized to make any fiduciary relationship with Clean and so any hiring that Tacy will be doing on behalf of the Clean will be binding on Clean as the principal. So, Tacy will be hired to perform the work of hiring for Clean and hence becomes an independent contractor. Hiring Tacy an independent contract will be advantageous to the company because the company will save money for the company since it will not pay employee insurance, training, sick leave, equipment, holiday pay, or employee benefits. The company will also enjoy greater flexibility as Tacy will help with recruiting IT employees while the company concentrates on other issues. Additionally, less management will be required if Tacy is engaged as an independent contractor since independent contractors manager themselves and are not controlled.
2. The hiring of IT staff will be a shorter term assignment. IT staff may be needed for specific task by Clean where they would be required to set up an IT system, maintain an IT system, and upgrade an IT system. This means that the services of IT professionals may be required from time to time but not on a full time basis. Short term hires of IT professionals will be appropriate due to the nature of their obligation and will also help the company is saving on costs of having permanent employees. Since the IT staff will be required on a short term basis, it will be easier and more flexible to have Tacy as an independent contractor. For short term assignment, an independent contractor will be appropriate because he will not work regularly as an employee but will work as required and would be subject to the law of agency. It will give the company a greater flexibility as they will be able to hire Tacy anytime they need his services on a new project. Alternatively, it will enable the company to reduce the support they need during slower months which means it only outsource for what it needs and when it needs it. Hiring Tacy as an independent contractor will be beneficial to the company because of less management and less control which leaves the company enough time to concentrate on the core business. 
3. It wouldn't be prudent to hire Tracy and let him go when one wave of hiring is complete and then rehire when needed. This is because there will be no guarantee that the employee will be on standby waiting for the opportunity to crop up and then be recruited again by the company. Every employee values stability and security in regard to their job. If Tacy is an employee and is let go when one wave of hiring is complete, there is a greater chance that he will try to look for a more stable opportunity elsewhere. The company may not find him in the job market when they need to fill IT positions in the future. The risk of hire/let go/rehire scenario is that there is no loyalty as such employees may have no sense of company loyalty but a hired gun for a specific duration of time. There is a chance that the company will lose the employee because such employees may find better opportunities elsewhere. Other risks of this scenario is that the employee may be entitled because they may not want to be considered new employees although boomerang are normally classified as new hires. Such employees may be stubborn as they may cling to old processes and systems from their previous tenure while the rest of the company has changed. A lot can change in the organization even for a short duration of time, a re-hired employee may find it difficult to adjust to the changes and may cling to the old ways of doing things.