MBO Partners provides terrific guidance on how to minimize the risks of misclassifying workers:
1. Be Aware of Degree of Control
One of the top causes of misclassification is degree of control in a client-independent contractor relationship. By law, independent contractors operate as their own business entity. They have the right to complete work when, where, and how they choose, and can openly market their services to other businesses. Companies must therefore be careful not to exert too much control over the independent contractors they engage. For example, in most cases, independent contractors should not be performing the same work as employees.
As a best practice, it is always good to refer back to defined contractual deliverables when interacting with independents. Managers should avoid asking for specific reporting that may lead to some sort of influence over how work is completed, or make independent contractors attend corporate meetings or events that are not outlined in a contract.
2. Minimize Rogue Enterprise Managers
When managers are in a pinch to find talent, they may turn to their own network or an online marketplace for a fast solution. Unfortunately, this type of rogue engagement can lead to big misclassification problems. Simply put, worker misclassification is more likely to occur because much self-sourcing technology today lacks a level of compliance vetting that enterprises need to compliantly engage highly-skilled independent talent. It is therefore very important to educate managers on the risk of engaging independent talent in this way and to encourage them to instead work through an established engagement program or other appropriate channels.
3. Prioritize Independent Contactor Satisfaction
When independent contractors are dissatisfied or believe they have been improperly classified—perhaps they have been forced to work on a 1099 or think they should be classified as an employee because they do similar work as employees—they are more likely to take action that raises classification questions or triggers an audit.
By understanding the unique needs of independent talent and prioritizing these key factors, independent talent will be happier with their choice in client partnership. Top factors that influence satisfaction include: a clear onboarding process and project scope, fair and quick compensation, and reasonable processes and procedures.
Read the full story at Four Ways to Minimize Worker Misclassification | MBO Partners