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Is your independent contractor actually an employee? Claudia St. John discusses the challenges businesses have when making this distinction.

Independent Contractor or Employee?

How a worker should be classified is a common question fielded by Affinity HR Group consultants. The DOL and IRS operate under two varying sets of standards and many states also have their own determination of classifications for workers. All of this makes for a very murky understanding for employers.

While several factors must be met for proper classification, the more a company has control over when and how a worker completes assigned work, the more likely that person will be an “employee”.  If a worker has the opportunity to experience profit or loss, provides their own facilities and/or equipment, exercises a high level of skill while working,  and controls how and when they do the work, they MAY be an independent contractor.

The misclassification of employees and workers can create wage-and-hour, unemployment, workers’ compensation, and tax liability for employers so it is important to review the regulations carefully and consider each employee individually. 

Utilizing independent contractors can create increased exposure to federal and state government audits. These agencies focus on companies with independent contractors to make sure they are not misclassifying workers in order to avoid paying taxes, minimum wage, and overtime, as well as not providing the required benefits.

We can help!

Regardless of the makeup of your workforce, it is important to remember there are regulations to follow for all types of workers, and the penalties for employee misclassification or failing to follow those regulations can be very costly.

Connect with us at 877-660-6400 or to learn more!

The Monday HR Minute, brought to you by Affinity HR Group, is designed to provide you with practical, applicable human resources and management advice and information. We believe that by dedicating just a few minutes a week to thinking about people management practices, business owners and managers can make enormous strides in improving workplace performance.
Affinity HR Group is a full service human resources consulting firm that specializes in advising small and medium-sized enterprises. Our services include recruiting and selection, HR policies and compliance, ad hoc HR support, compensation and performance management, and training and development. We are an endorsed HR partner of a number of leading national trade associations and offer free initial consultations and discounted services to their member companies.
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This e-mail may contain general information about legal matters. Affinity HR Group does not provide legal counsel. The information provided should not be considered legal advice and should not be relied on as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about this content or any legal matter you should consult your attorney or other professional legal services provider.
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