The title of recent congressional hearings—“The Misclassification of Workers as Independent Contractors”—says it all. Some in Congress are looking to change the Fair Labor Standards Act to further define who is an “employee” and who is an “independent contractor.”
Organizations often use contractors to avoid the tax and legal liabilities associated with employees, but those lines can blur. Classification errors can lead to big tax-and-wage penalties for employers.
If you use lots of independent contractors, get solid advice from your counsel and accountant. And stay tuned for possible changes.
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