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
Updated to reflect proposed regulations that would update and revise the Fair Labor Standards Act (FLSA) overtime exemption requirements.
Updated to reflect information on a decision concerning independent contractor classification under the National Labor Relations Act (NLRA).
A new NLRB decision has overturned an Obama-era labor board ruling and restored the standard for determining independent contractor status to one based on the traditional common-law test.
Updated to reflect the Illinois Service Member Employment and Reemployment Rights Act, effective January 1, 2019.
Use this workflow to navigate the process of hiring an independent contractor.
Updated to reflect amendments regarding workers' compensation, effective November 11, 2018.
Updated to reflect a court decision regarding the independent contractor test under California's wage orders.
This podcast looks at a Bureau of Labor Statistics survey that suggests a decline in the number of US workers employed in alternative work arrangements. Fisher Phillips attorney Rich Meneghello called the report flawed, but said it is not good news for HR professionals.
Updated to reflect a law regarding the status of certain marketplace contractors, effective July 14, 2018.
HR guidance on legally classifying and managing independent contractors under federal tax and employment laws.