Scaling Your Startup: Is Your Next Hire a Contractor or an Employee?

For small business owners in Utah, growing the team is an exciting milestone and you’ve likely faced the classic question: Should I hire an actual employee, or can I just find a "guy who knows a guy" and pay him via Venmo?


While it might be tempting to treat an employee (W-2) and an independent contractor (1099) as interchangeable based on your budget, the IRS and the Utah Labor Commission see things very differently. Misclassifying a worker isn't just a clerical error; it can lead to significant back taxes and penalties.


Here is a practical look at the differences to help you stay compliant while you scale.



The Independent Contractor (1099)


Think of a contractor as a separate business entity that you have hired to perform a specific project or attain a specific result. They are specialists who bring their own "secret sauce" to the table.


  • Autonomy: They generally use their own equipment, set their own hours, and work from their own locations.


  • The "What" Not the "How": You have the right to control the result of the work, but not the specific methods used to achieve it.


  • Financial Independence: They pay their own self-employment taxes, health insurance, overhead, and will typically invoice you for their services. They may have other clients besides your business.



The Employee (W-2)


An employee is someone who is fully integrated into your business operations. They are part of the daily rhythm of your company and are under your direct supervision.


  • Direction and Control: You dictate when they work, where they work, and the specific sequence of their tasks. You provide the equipment to complete those tasks.


  • Business Integration: Their services are usually a "key aspect" of your regular business activity. If your business is a bakery, the person baking the bread is likely an employee; the person fixing the oven is likely a contractor.


  • Employer Obligations: You are responsible for withholding income taxes and paying a share of Social Security and Medicare. In Utah, you’ll also need to ensure you're covered for Workers' Compensation and Unemployment Insurance.



The Bottom Line: Control


The government looks closely at the reality of the working relationship, not just the title you put on a contract. Your degree of control, or lack thereof, is key. Ultimately, if it looks like a duck and quacks like a duck, they’re going to treat it like a duck.


Taking the time to classify correctly now prevents headaches down the road. We are here to help you craft, review, and amend employment and contractor agreements and navigate any other issues that may arise as you scale your workforce.


By Adrienne Langmo January 8, 2026
AI is undoubtedly amazing. On one single platform I can direct it to, for example, “write me a 400-word blog post about the legal risks of private employees use of AI directed at Utah small to medium-sized businesses.” And then ask it to illustrate that post with an image of a robot in a skirt suit. (And now you’ll wonder if I even wrote this post myself…. I did. But I did not sketch the image myself.) And we all know AI has real limitations. We’ve heard the stories about AI hallucinations, where it simply invents an answer. And often AI simply gets it wrong. For example, I often use AI to pull up the citation to a statute and often it produces a link to a bill that hasn’t been enacted, a bill that’s been repealed, or a similar statute that’s applicable to a different industry than the one I asked it to find. But there’s also legal risks in using “Open Access” or “Free Tier” AI versus “Enterprise” or “Business” AI. Open access/free tier AI is the version you can use for free on a web browser or on app on your computer or smart phone. With many of these tools, user inputs may be stored or used to improve the model. Enterprise or business AI, by contrast, is a commercial‑grade system that typically offers encryption, enhanced privacy controls, and contractual data‑security commitments. If you do not have the latter­­—enterprise AI— then you really may want to find out what your employees are inputting into an unsecured AI tool. Is it client or employee information, like personally identifiable information? Medical information? Company trade secrets? Financial information? Depending on your company size and the type of information input into an unsecured AI tool, employees may be creating legal risk under Utah’s data breach notification law, the Utah Consumer Privacy Act (for businesses that meet its thresholds), federal privacy laws, even anti-discrimination laws and contractual confidentiality obligations you have made directly with your clients. The New Year is a great time to review old policies, create new ones, and train staff on these concerns. We are here to help you navigate these emerging issues! -By Adrienne Langmo
By Adrienne Langmo September 30, 2025
As the federal fiscal year draws to a close, thousands of federal employees face an unsettling possibility if a continuing resolution is not passed: not just another shutdown and temporary furlough, but permanent layoffs through Reduction in Force (RIF) notices. This week, the Office of Management and Budget (OMB) instructed federal agencies to consider issuing RIF notices to employees (if certain conditions are met) rather than the usual temporary Furlough notices issued during shutdowns. This is a big shift. But it does not mean layoffs are guaranteed. If they occur, federal employees are protected by a robust set of legal rights. There’s still a process before a RIF can be properly issued, complete with notice rights, retention rights, appeal rights and such other rights that the OMB does not purport to usurp. That said, we understand that the anxiety of this uncertain moment is real. Here are some tips to best prepare for the unknown, come the end of the federal fiscal year: Download Your eOPF, ASAP o Your electronic Official Personnel Folder may become inaccessible during a shutdown. Download it now to preserve your employment records. Download Your last 3 Performance Appraisals, ASAP o Include mid-year reviews and commentary. These documents may affect retention rights in a RIF. Also save records of other awards, commendations, and other notable performance records. Save Key Communications o Save emails, memos, or notices from HR or supervisors about your employment status or shutdown protocols. Ask Questions o Supervisors, HR, and union reps are navigating this too. Don’t hesitate to ask questions. If you receive a RIF notice or suspect you were subject to procedural violations, don’t hesitate to reach out to us for our advice. We are here to help. Shutdowns may be political. Your livelihood is personal. Let us help you safeguard it. -Adrienne Langmo, Partner
By Adrienne Langmo September 12, 2025
If you're working for — or running — a business with under 50 employees, the Family and Medical Leave Act (FMLA) might seem like a distant federal regulation. But for eligible employees and covered employers, it’s a powerful tool for balancing work and life during major health or family events. Here's what you need to know. 🧩 The What The FMLA is a federal law that allows eligible employees to take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specific family or medical reasons, including: The birth or adoption of a child Caring for a spouse, child, or parent with a serious health condition Recovering from a serious health condition themselves Certain military-related family needs The leave can be taken intermittently, in blocks, or in one long swath. During FMLA leave, employers must maintain group health benefits as if the employee were still working. When the leave ends, the employee is entitled to return to the same or an equivalent position. 👥 The Who FMLA is mandatory for employers with 50 or more employees within a 75-mile radius. So, if your business has fewer than 50 employees at a given location, you’re not legally required to offer FMLA leave —but you can choose to adopt similar policies voluntarily. Employees must also meet FMLA eligibility criteria: Worked for the employer for at least 12 months Logged at least 1,250 hours in the past year Work at a location with 50+ employees within 75 miles *State employees may have additional benefits provided under state law. Here, we’re discussing private employers and employees. 🛠️ Employer Takeaways Treating employees appropriately during their FMLA leave and upon their return can present some hurdles for employers and coworkers, particularly when an employee has been on leave for some time and, e.g., projects or programs have evolved in their absence. You don’t have to navigate these situations alone; we can provide your team with the tools and information necessary to smoothly navigate the full FMLA process and avoid any sticky FMLA retaliation or interference claims. And, even if you’re not legally bound by FMLA, offering comparable leave can be a smart move. It builds trust, boosts retention, and shows you value your team’s well-being. Consider crafting a voluntary leave policy that mirrors FMLA protections, including: Clear eligibility rules Defined leave duration Job protection guarantees Coordination with paid time off or disability benefits For small businesses, this means you have flexibility—but also responsibility to communicate policies clearly. Want to overhaul those policies or craft great messaging to your team, give us a call! We’re here to make leave policies less painful and more practical. 📣 Employee Takeaways If you work for a small Utah employer, ask about your company’s leave policies. While FMLA doesn’t require you to use your accrued leave during your FMLA leave, it allows your employer to write into its policy a requirement that you do so. Make sure you read that policy! And, even if FMLA doesn’t apply, your employer may offer benefits similar to FMLA. If you’re dealing with a serious health issue or family emergency, document your situation, give notice as early as possible, and follow internal procedures. Need help understanding those procedures or your rights as an employee? We got your back! ⚖️ Final Thoughts FMLA is more than a legal acronym—it’s a lifeline for employees facing life’s biggest challenges. For Utah employers, understanding the law and choosing to offer similar protections can set your business apart. Whether you're an HR manager, CEO, or a team member, knowing your rights and responsibilities helps everyone navigate leave with clarity and compassion.