Employers sometimes make mistakes when it comes to employee classification, training and termination. To help prevent these errors, make sure you follow the legal guidelines. Three employment mistakes were covered in the last post. To see the ones discussed previously, see https://affordablebookkeepingandpayroll.com/?p=683. Below are three more mistakes employers may make.
1. Classifying workers as independent contractors to avoid running payroll, having worker’s compensation insurance, and reducing payroll tax payments.
The Internal Revenue Service as well as each state have regulations for who qualifies as an independent contractor. Classifying someone as a 1099 worker who doesn’t fit the qualifications may put you at risk for interest and penalties on unpaid payroll taxes that should have been remitted to the tax agencies. Some of the determining factors are:
- a. Who controls the schedule?
- b. Whose equipment is used to complete the work?
- c. Who determines how the work is to be done?
- d. Are any benefits provided such as insurance or vacation?
This misclassification may be discovered when the “independent contractor” files for worker’s compensation, unemployment, or disability. At that time, the IRS and/or tax agency may say tax is owed that should have been withheld from the worker as well as the employer’s tax due on the amount earned.
Mistake #2: Failure to provide training to managers about harassment and discrimination
Managers and supervisors need to be aware of what is considered discrimination or harassment. Failure to do so puts the company at risk of a lawsuit by one or more employees. Policies should be in place for managers to follow when they believe a situation has occurred that can be construed as discrimination or harassment. Every effort should be made by the company and its supervisors to prevent any behavior which may be deemed inappropriate.
Mistake #3: Terminate an employee for taking a leave of absence
Employees have legal protections when it comes to certain leaves of absence. Terminating an employee for taking time off can lead to serious ramifications, even if you believe the employee is not going to come back at the end of the leave. Protected leaves include (but are not limited to) worker’s compensation, disability, pregnancy, family and medical leave, military leave, jury duty, etc. The employer can not terminate once the employee has returned to work because of the leave either. If an employer terminates the employee upon his or her return to work, it will have to be proven that the employee was terminated for a legitimate cause not related to the leave of absence.
Knowing the employment laws will protect you from making mistakes in many areas. If you are not sure of the rules, search your state’s as well as federal labor laws to make sure you are compliant in these areas.
The next post will cover the final mistakes employers may make.
