Employee or Independent Contractor?

Employee Misclassification Crackdown Gains Momentum

misclassification

From HCMWorksMark Liebenthal discusses the increased focus on employee misclassification.  He reports that it is not just trucking and transportation and offers recommendations on how to protect you business.  Mark writes:

What can you do to protect your business?

There are numerous courses of action you can take, including reclassifying your independent contractors as employees, sometimes taking advantage of certain state and federal amnesty initiatives.

However, according to a recent article published in Forbes, For some companies, the quickest way is to reclassify independent contractors as employees or redistribute them through the use of staffing companies.”

 The challenge, of course, is that staffing companies charge a hefty markup on any independent contractor they take under their wing. These staffing vendor markups are generally in the area of 30% and sometimes reach as high as 50%.

A more affordable alternative is to work with a contingent workforce management solutions provider who, for a nominal fee, will do the following:

  • Conduct a detailed classification exercise
  • Evaluate the risk profile for each category of worker
  • Make strategic recommendations as to how to restructure the contractual relationship with the contractors
  • Engage them on your behalf to create an arms-length relationship
  • Manage the full contract lifecycle from engagement to termination
  • Consolidate billing and payments to streamline administration

It’s like a misclassification insurance

Some contingent workforce management solutions providers will not only bear the risk but will even indemnify you against any legal challenges that could arise. For that reason, care is taken to examine each class of workers, and each independent contractor, one by one (including scrutinizing their contractor agreement), then classify them according to their inherent risk profile, from low to high.

For all high-risk workers, the contingent workforce management company would generally recommend that you reclassify them as employees. For medium risk workers, a series of measures could be put in place to minimize the risk.

Read the full story at Employee Misclassification Crackdown Gains Momentum

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