Workers, employers, and government agencies can find new guidance on the Department of Labor’s new website about contractor misclassification (workers shown as independent contractors rather than employees).
According to the Department of Labor (DOL), the misclassification of workers as independent contractors continues to be a huge problem in the United States. This new resource is intended to educate employers about the harm misclassification causes by offering “information about how misclassification affects pay, unemployment insurance, safety and health protections, retirement and health benefits, and taxes.” Employers can also use the information to audit their relationships classed as independent contractors.
With the release of these new materials, the message to employers should be clear – the DOL will be continuing to heavily scrutinize independent contractor relationships in 2017. It is recommended that all employers who use independent contractors review these materials and use those materials to evaluate their independent contractor relationships.
There are very specific guidelines to follow when determining if someone is an employee or an independent contractor. The IRS looks at multiple categories when making its determination which include behavior control, financial control, and the relationship of the parties. Make sure to follow all of the mandated guidelines to guarantee you are in compliance with the classification of your workers. Failing to do so could end up being a very expensive mistake!
I have written a series of blogs on Contractors VS Employees in the past. Read more on this topic here:
