Legal issues with contract labor?


Are there any legal pitfalls I should know about when creating a service where I pay users to provide a service to customers? The model I'm thinking about is like Amazon Turk for a certain vertical. Users will sign up and then be able to do short jobs. They'll earn a few bucks per job, then at the end of the month we'll pay them for the number and size of jobs we did. It might be anything from 1 to a few hundred.

Am I right in thinking that these users will be considered contract labor?

Are there any problems that can arise from paying people outside the US (which is where I am)? Or for witholding payments until the user has earned a certain amount (say $500)?

I realize I'm going to need the services of a lawyer to set this up, but want to know if there's some huge problem I'm overlooking before I put a lot of time and money into planning my business on this model.

Contract Legal Employees

asked Jan 10 '10 at 06:37
11 points
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2 Answers


To oversimplify somewhat, your most important task will be to make sure that you have in place, with all users and customers, binding terms and conditions that (a) properly reflect the business relationships and (b) provide adequate legal protection.

From your description, it appears likely that your users will be classified as independent contractors rather than employees, largely because they, rather than you, will decide how their work is done. Please see Avoiding the "Independent Contractor" Trap.

I see no problem paying people outside the U.S. so long as the payments are not going to embargoed countries or entities.

As regards withholding payment until a specified amount is reached, a lawyer should advise you in light of the law of the state where you will be doing business.

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

answered Jan 10 '10 at 09:05
Dana Shultz
6,015 points


One thing you can do is look through Amazon's Mechanical Turk and read all their Terms and Conditions and whatever else they post.

As you said, you need a lawyer for the particulars, but if it's good enough for Amazon it's possible that it's appropriate for you too.

answered Jan 10 '10 at 08:13
16,231 points

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Contract Legal Employees