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
In a victory for Uber, a National Labor Relations Board (NLRB) advice memorandum has concluded that the company's drivers are independent contractors rather than employees.
Updated to include amendment to veterans preference law, effective May 14, 2019.
Updated to reflect a California Division of Labor Standards Enforcement (DLSE) opinion letter regarding the independent contractor test under California's wage orders.
Updated to reflect a forthcoming amendment regarding independent contractor classification.
In Vazquez v. Jan-Pro Franchising, the 9th Circuit Court of Appeals noted that it is "basic in our legal tradition" that court decisions such as the California Supreme Court's 2018 Dynamex decision should apply retroactively.
Updated to reflect amendments to the unemployment insurance rules, effective April 26, 2019.
Applying six factors derived from Supreme Court precedent, the US Department of Labor (DOL) said certain service providers were not "economically dependent" on an unnamed gig economy company that requested the opinion letter.
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).
HR guidance on legally classifying and managing independent contractors under federal tax and employment laws.