Last week was the Independence Day holiday. We’re talking independents here.
As a small business, there is a temptation to want to call all of your workers “independent contractors” to avoid the hassle of the various payroll taxes and reporting that comes with having “employees” versus 1099 independent contractors.
However, both the state and (especially) the federal governments are cracking down on what has come to be known as “independent contractor misclassification.” The government cares because they’re losing out on taxes paid. Plus, if the worker gets sick or hurt, chances are pretty good that the worker will rely on Medicaid or the Social Security Disability program, rather than being covered by private medical insurance or worker’s compensation insurance. Besides the government that is there to help, plaintiff class action lawyers are trolling, too, and wage and hours issues are easy chum for them.
The IRS has a three-pronged program for ‘coming clean’ if you think you’ve been misclassifying workers as independents when, in all honesty, they’re probably really employees.
What is the “test” for whether a worker is an employee versus an independent contractor? You could read and interpret this, or you could call me, or you could interpret it yourself and find out you interpreted wrong, and still call me.