Overview: 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 properly classifying 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: The Internal Revenue Service, the US Department of Labor and state agencies are cooperating to enforce independent contractor misclassification.
Author: Michael Cardman, Legal Editor
Lawson v. GrubHub appears to be the first ruling involving gig workers who perform on-demand work facilitated by a digital platform.
Updated to reflect changes in the test used by the US Department of Labor to determine whether interns are employees under the Fair Labor Standards Act.
This section helps HR professionals determine whether a worker is an employee or independent contractor under federal laws, manage independent contractors, and limit liability when reclassifying independent contractors as employees.
The Illinois Department of Labor will create an online employee misclassification referral system for employees who claim they were misclassified as independent contractors will be able to file a complaint to multiple agencies at once.
Effective December 31, 2017, North Carolina will create a new Employee Classification Section within the North Carolina Industrial Commission to investigate reports of employee misclassification and assist other state agencies in recovering back wages, taxes and more.
Updated to reflect information on a court ruling clarifying the coverage of limited liability companies under unemployment insurance.
Updated to reflect law regarding the status of drivers for ride-sharing companies, effective May 29, 2017.
Updated to reflect a new law providing that drivers for ride-sharing companies will be independent contractors and not employees if certain conditions are met, effective July 1, 2017.
The US Department of Labor's recent withdrawal of two administrator interpretations issued during the Obama administration may signal a more employer-friendly enforcement posture under the Trump administration.
HR guidance on legally classifying and managing independent contractors under federal tax and employment laws.