employment relationship
Definition
An employment relationship is the legal connection between you as a business owner and someone who works for you as an employee, where you control not just what work gets done but also how they do it. This relationship triggers a whole set of legal obligations on your part, including paying payroll taxes, providing workers' compensation coverage, and following wage and hour laws.
Example
If you hire a cashier who works set hours, uses your equipment, and follows your procedures, you have an employment relationship with that person and must withhold taxes from their paycheck.
Watch Out
Many business owners mistakenly treat workers as independent contractors to avoid these obligations, but the government looks at the actual working arrangement rather than what you call it, and misclassifying an employee can result in hefty back taxes and penalties.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.