With the new year, taking the time to review the status of your independent contractors may create valuable savings. Independent contractors, when properly classified, can often be a valuable and efficient means for both businesses and individuals to conduct business. Many businesses engage workers on an independent contractor basis as means of avoiding rigorous requirements associated with an employment relationship, including payment of minimum wages and overtime; provision of benefits, workers’ compensation insurance and unemployment benefits; and protections under discrimination and safety laws – all of which may result in significant costs to the operation of a business. If employees are misclassified as independent contractors, however, the company risks the potentially hefty damages resulting from a misclassification.
The downturn in the economy has changed the face of independent contractor arrangements for a variety of reasons. For workers, being classified as employees often means that they receive benefits, including paid vacation time, subsidized health insurance, workers compensation insurance benefits and unemployment benefits. For many government agencies, classifying workers as employees often generates greater revenue from employment taxes that should have been paid, plus penalties and interest. According to the National Employment Law Project’s Summary of Independent Contractor Reforms, New State … Keep reading