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
Hiring independent contractors can provide an employer with cost savings in salary and benefits and give staffing flexibility to address temporary projects or demands. When deciding to hire an independent contractor, an employer should follow the steps in this How To.
An employer that uses independent contractors should adopt written policies regarding the hiring and payment of independent contractors to limit the risk of misclassification.
An employer can customize this agreement to detail the project, deadlines, payment arrangements and termination provisions of an independent contractor's work.
Employers that care more about an end result than how it is achieved can avoid certain taxes, legal liabilities and administrative challenges by hiring independent contractors instead of employees. The risks of incorrectly classifying a worker as an independent contractor instead of an employee, though, have never been higher.
New York employers need to be aware that the New York State Commercial Goods Transportation Industry Fair Play Act's effective date has been extended to April 10 and its scope of coverage has been slightly expanded.
As mandated by the Illinois Department of Labor, all construction contractors hiring independent contractors must post the Illinois Employee Classification Act of 2008 Poster.
The recent signing of the New York State Commercial Goods Transportation Industry Fair Play Act has resulted in an update to the Employment Law Manual and a new addition to the Legal Timetable.
In-depth review of the spectrum of New York employment law requirements HR must follow with respect to independent contractors
Under the New York State Commercial Goods Transportation Industry Fair Play Act, drivers classified as independent contractors will need to satisfy either a variation of the ABC Test or an 11-factor test for determining whether they constitute a separate business entity.
HR guidance on legally classifying and managing independent contractors under federal tax and employment laws.