Using Independent Contractors — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily
  • LinkedIn
  • YouTube
  • Twitter
  • Facebook
  • Google+

Using Independent Contractors

Get PDF file

by on
in Employment Law,Human Resources

Many businesses use independent contractors as a way to sidestep payroll taxes, expensive fringe benefits and red tape. But if the IRS concludes that those workers are really employees, you could be liable for back taxes, penalties and interest charges. You also risk facing an audit by the U.S. Department of Labor and getting sued for back wages and penalties if you misclassify employees as contractors.

What’s worse, the newly classified employees could sue your organization to be included retroactively in your benefits plan, forcing you to incur a huge, unexpected personnel cost.

The IRS Test

For years, the problem for businesses had been the ambiguity of the 20-factor test the IRS used to classify workers. In the late 1990s, under pressure from Congress, labor and business interests, the IRS simplified the test. It consolidated the 20 factors into 11 tests and organized them into three main groups: behavioral control, fin...(register to read more)

To read the rest of this article you must first register with your email address.

Email Address:

Leave a Comment

Previous post:

Next post: