YOU SAY EMPLOYEE, I SAY INDEPENDENT CONTRACTOR: 12 BEST PRACTICES FOR AVOIDING WORK MISCLASSIFICATION SUITS IN THE GIG ECONOMY
It can be difficult for employers to keep up with changing trends and policy related to independent contractors, but it is essential to cover the liabilities these types of workers can present. Worker classification or misclassification is not simply a tax reporting issue. According to the statutory language, "any person" who violates the Fair Labor Standards Act, which includes an employer, supervisor, manager, HR, and others, can be sued both civilly and criminally under certain circumstances.
Misclassification of workers as independent contractors can also leave employers liable for back pay of wages and overtime, unpaid tax withholdings, liability payments, benefits, and a number of other mounting fees.
There is no single test to determine independent contractor status for all purposes in the event of litigation.
Always have a written agreement with independent contractors.
Require independent contractors to complete a W-9 Form.
Do not give an independent contractor a job title within your organization.
Keep independent contractor files with vendor files.
Do not provide independent contractors with employee-type benefits.
Do not conduct performance evaluations with independent contractors.
Determine if the company's competitors classify similar workers as independent contractors.
Do not control the details of the independent contractor's work.
Avoid having an independent contractor do the exact same job as another employee at the company.
Pay independent contractors by an agreed-upon fee.
Avoid giving independent contractors physical items that indicate they have a similar status as employees.
This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship.
For more information on this and other topics, please contact Kevin via any of the channels listed below:
📧 kevin@kmckernan.com | 📞 718-317-5007