Overview: Having independent contractors offer benefits and risks. The benefits include avoiding certain taxes, legal liabilities and administrative challenges.
However, the risks can be great. Before filling a position with an independent contractor, it is essential to carefully consider the myriad factors that go into proper employee classification a worker as an independent contractor. An independent contractor should qualify not only under the tax code, but also several other state and federal employment laws that may come into play. Inaccurately classifying someone as an independent contractor can set an employer up for costly enforcement actions.
Trends: Government enforcement of independent contractor misclassification is stricter than ever, as the Internal Revenue Service, the U.S. Department of Labor and state agencies cooperate to enforce the laws.
Author: Michael Cardman, Legal Editor
In-depth review of the spectrum of Montana employment law requirements HR must follow with respect to workers' compensation.
According to new statistics, a greater proportion of the US Department of Labor's enforcement actions are being targeted at industries that commonly use franchising, independent contractors, subcontracting and third-party intermediaries such as temporary employment agencies or labor brokers.
The Independent Contractors: New Jersey section of the Employment Law Manual has been updated to reflect the New Jersey Supreme Court's ruling that the ABC Test must be used to determine whether a worker is an employee or an independent contractor under the state's overtime and wage payment laws.
The Florida Department of Revenue has agreed to coordinate with the US Department of Labor (DOL) in its efforts to prevent the misclassification of employees as independent contractors.
The New Hampshire Department of Labor and the US Department of Labor have agreed to conduct joint investigations, coordinate enforcement activities, and make referrals of potential violations.
Alabama is the 16th state to join the US Department of Labor's Misclassification Initiative, following California, Colorado, Connecticut, Hawaii, Illinois, Iowa, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah and Washington.
Newly revised IRS procedures allow independent contractors to stop or prevent backup withholding on reportable employer payments by validating and presenting a Social Security card to an employer.
In-depth review of the spectrum of Maine employment law requirements HR must follow with respect to recruiting.
Use this workflow to determine if an employee is exempt or nonexempt from the minimum wage or overtime requirements of the Fair Labor Standards Act (FLSA).
In-depth review of the spectrum of Virginia employment law requirements HR must follow with respect to recruiting.
HR guidance on legally classifying and managing independent contractors under federal tax and employment laws.