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Independent Contractor Compliance

The ramifications of worker misclassification are absorbed by the IRS, contract workers and the companies that leverage them. As such, it’s critical for independent contractors and their employers to fall in compliance with the classification standards set forth by the IRS.

Contrary to popular belief, simply having a worker sign a contract stating that they are an independent contractor and not an employee is actually not sufficient. These types of signed documents will not hold up in court against evidence suggesting otherwise. In fact, one in three companies fail a worker classification audit and nearly half of all independent contractors are improperly classified. 

By stripping a worker of employee status, the worker is then stripped of such benefits as:

  • Overtime pay
  • Paid vacation, holiday and sick days 
  • Employer’s share of Social Security and Medicare contributions
  • Unemployment compensation 
  • Workers’ compensation

Meanwhile, employers make significant mistakes by failing to comply with classification guidelines. If the employer is caught, he or she could face penalties that include:

  • Fines for each W-2 not filed that should have been
  • All back taxes, plus interest
  • A Failure to Pay Taxes penalty 
  • Any additional penalties imposed by the IRS

The Solution to Contractor Compliance

With the increasing use of an independent workforce comes an increased level of scrutiny by the government surrounding independent contractor compliance. Companies everywhere are utilizing TalentWave to more easily comply with classification standards.

Our IC compliance solution properly and efficiently classifies workers and helps to maintain compliance throughout the engagement with their employer.

The capabilities of TalentWave don't stop with classification compliance, however. Our platform can be used for payroll processing, tax filing and benefit distribution for independent workers.

We can even serve as an employer of record for your contracted help that doesn't qualify as independent contractors. As a result, you’ll be alleviated from the costly and time-consuming responsibilities that come with managing contracted workers and eliminate the risk of worker misclassification.

Fill out our submission form and we’ll contact you within 24 hours to discuss you independent contractor compliance needs.

 

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Sources

IRS.gov: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Entrepreneur: https://www.entrepreneur.com/article/246139

Just Works: https://justworks.com/blog/consequences-misclassifying-workers-independent-contractors

There's Much More

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