Businesses Engaging Workers
As a business owner, whether large or small it is almost inevitable that you will find yourself in a position whereby you need to hire workers to enable you to serve and/or grow your customer base and fulfill the objectives of your business. When this need is identified, the very next decision will be the manner by which you engage these workers.
If you make the business decision to hire an individual as a W2 employee, while you must still comply with myriad responsibilities surrounding employer obligations and ensuring employee rights are met, you do indeed eradicate the risk of independent contractor misclassification.
However, there are many businesses that want to engage independent contractors rather than hire as W2 employees, and also many workers who do not want to be an employee…they want to be independent contractors. Many feel that it is the "American Dream" (learn more about our services for individuals seeking to be independent workers).
The government does not make it easy to determine the legally appropriate way to make the determination between independent contractor and employee. This is where the confusion and mystery surfaces. It can be frustrating…we know.
There are many different “tests” to determine worker classification determination, all with overlap as well as differences in the way they assess and determine. We have the IRS, with a primary focus on control of the worker, using the Common Law Test. We also have the DOL, with primary focus on the economic dependence of the worker, using the Economic Realities Test. Then, as if that is not enough, we have the individual state governments using their own individual tests, including the very strict ABC test. It can get very complicated.
Every case is unique and the final determination of employee or independent contractor is based on the preponderance of the evidence after looking at the totality of the prospective work/engagement as well as the particulars of the individual and his/her situation. If the evidence fails at any level you could find yourself in a misclassification situation and subject to financial and legal risk.
Let the Intend experts take the burden of this complex and critical analysis off your shoulders...We Can Help!