The most basic question about the employment relationship—whether a worker is an “employee” or “independent contractor”—has baffled HR and employers for years. You can save big on taxes, benefits and liability by using contractors, but the risk of misclassifying them is huge … and getting worse. A massive “Misclassification Initiative” launched by the IRS and DOL is targeting employers with more audits and closer scrutiny.
At the same time, the definition of an independent contractor keeps changing. The Trump administration drafted a brand-new “economic reality” test to make it easier for you to treat workers as contractors. Now the Biden administration has shelved those rules and is planning a new definition this year. Where does that leave employers? And how must you comply with your state’s often stricter and contradictory guidelines?
If you classify any workers as independent contractors (or plan to do so), now is the time to make sure you get that classification correct and understand the upcoming changes. Discover your classification mistakes BEFORE the feds do!