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HR Outsourcing News Roundup: Employee or Contractor Edition
No CommentsDetermining whether a worker you hire is an employee or contractor is an important decision that can carry serious legal consequences. Your responsibilities as an employer are determined based on the employee classification you select and when you get it wrong, you leave your business vulnerable to lawsuits and penalties.
Late last month an appeals court panel ruled that FedEx Ground had misclassified its truck drivers as independent contractors when they really should be employees. The case still faces additional appeals, but illustrates how businesses of all sizes can run into legal troubles related to employee classification.
This week’s HR Outsourcing News Roundup brings you articles and blog posts with recent cases involving employee misclassification and advice on how to decide if a worker is an employee or contractor.
Labor’s Day: Appeals Court Panel’s Ruling in FedEx Case Could Change Rules of the Game. DC Velocity: “The use of independent contractors (ICs) is nearly as much of a trucking industry tradition as strong coffee, the avoidance of weigh stations, and lengthy waits at shipping docks. For decades, it has been commonplace for an owner-operator to work under contract to a large trucking company to augment its in-house fleet….Last Thursday, a three-judge panel of the Ninth U.S. Circuit Court of Appeals struck perhaps the most decisive blow to date against the contractor model. The panel ruled that a class of 2,300 drivers who from 2000 to 2007 were classified as contractors for FedEx Ground, FedEx Corp.’s ground parcel delivery unit, were actually employees under California law.”
Who is an Employee, Joint Employee, or Independent Contractor? The Huffington Post: “These decisions have some common lessons. Contract language is important. Employers are tempted to load-up a contract with provisions to cover any future contingency. However, the more potential worker control the contract allows, the more likely workers are employees. If a worker indefinitely earns a living only from one employer, the more likely there is an employment relationship. Workers should have some breaks in employment with a single employer if they are truly independent contractors. Calling a worker an independent contractor does not necessarily make her or him one. In contrast, a worker who appears to be an independent contractor may be an employee in some situations.”
Small Business, Big Mistake: Classifying Employees as Independent Contractors. The Washington Post: “Not only did they determine that one past contractor was an employee, they also designated three others as employees. As a result, I had to pay thousands of dollars in employment taxes for those individuals for that entire time frame, even though some of them weren’t even on my payroll at the time of the audit. I thought I had done my due diligence to develop an understanding of what constitutes an employee versus an independent contractor. Ultimately, though, reading through the Internal Revenue Service’s checklist and trying to sort through my state’s guidelines on my own didn’t prove sufficient.”
Workers Comp Corner: Being Mindful with Contract Help. The Barre Montpelier Times Argus: “Some employers seek to exclude people from workers’ compensation thorough execution of a contract. However, the courts have held that even if a person has signed an agreement purporting to absolve an employer of liability, that person may be an employee under the Workers’ Compensation Act if he is performing work normally performed by a direct employee. The intent of the parties at the onset of the relationship may be irrelevant as the status may change over time. Employers should exercise caution when hiring independent contractors. When it comes to workers’ compensation there may in fact be an employer/employee relationship.”
EventPro Strategies Highlights How Employee Misclassification Crackdown Continues to Impact the Event Marketing Industry. Exhibitor: “The event marketing industry has seen immense pressure over the past few years in regards to employee misclassification and the common practice of classifying its field team members as 1099 independent contractors, and the scrutiny has continued to intensify. The 2012 Department of Labor (DOL) crackdown on misclassification forced many companies into a paradigm shift regarding how they onboard and classify their experiential marketing field teams, and now Congress is currently considering the Payroll Fraud Prevention Act which would make the misclassification of employees as 1099 independent contractors a new federal labor offense.”
If you have questions about whether your workers are employees or contractors, please contact us. Our team is experienced in employee classification and can help your company stay on the right side of the law.
HR Solutions is a human resources outsourcing firm based in Baton Rouge, Louisiana. We eliminate human resources headaches for businesses with 10 to 1,000 employees by handling their payroll, employee benefits, regulatory compliance and other staffing needs. Contact us to learn how we can streamline your company’s human resources function to save money and reduce risk.
