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U.S. Secretary of Labor Elaine Chao

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Philip J. Siegel, an attorney with the Atlanta-based law firm Hendrick, Phillips, Salzman & Flatt, has written about the importance of ensuring that your independent contractors aren't classified as employees if tested through the court system.

While most of us know about job titles, labels and compensation agreements such as Form 1099, according to Siegel, these are not the only factors that the U.S. Department of Labor, or the courts use as measurements.

U.S. Secretary of Labor Elaine Chao brought suit against First National Lending Corp., Middlesburg Heights, Ohio, according to Siegel, and won, based upon determining that the company didn't properly designate its workers.

Here are two of the considerations why the court ruled against them:

1. The court also found that it looked like their was an intended long-term working relationship, which coincides with what is called "general at-will principles," that implies an employee-employer agreement.

2. The biggest mistake made by the company though was that it didn't allow the loan officers to work for another company. This meant that the workers were dependent upon First National Lending economically, which made them employees in the eyes of the court.

They were ordered to pay $186,000 in overtime back pay plus 8 percent interest. All of this because they didn't classify workers properly.

Especially consider that it will not go well for you if you forbid contractors to work for other companies other than your own.