2020 has become another landmark year of transformational change for 1099 legislation, and most of it has flown under the radar. We have seen rapid and substantial legislative change in multiple states, groundbreaking lawsuits being filed and rapid shifts in the workforce trends — all of which have a significant impact on companies. With the economy reducing tax revenues at the state and federal level, this change is expected to continue and the pace may increase. Below, we have provided a brief overview. While it’s not even close to being all-inclusive of 2020 activity, it should provide a foundation to begin bringing you up to speed. And we will continue this conversation and share much more during our upcoming webcast on July 22, “2020: Trends and transformations to the world of work that you should know.” We invite you to register for the webinar today!
2020 Legislative Changes
Legislative activity for worker classification and 1099 compliance has certainly not taken a backseat in 2020 with significant activity in multiple states. Virginia alone has passed three new worker classification laws and had them take effect on July 1, 2020. These new laws focus on strengthening enforcement and penalties for misclassification and organizations with 1099s in Virginia will need to take immediate action to remain compliant and safeguard their organization.
Case Law Is Extremely Important
While new legislation tends to get the headlines, ongoing case law is extremely important. In short, the way judges interpret worker classification law shifts over time and sometimes these changes occur quickly. In May of 2019, a paper carrier who distributed for the same newspaper for 40 years filed a lawsuit against the media company that he engaged with as an independent contractor. The judge found the relationship was actually more like an employer/employee relationship and ruled in favor of the worker. This has significant implications for worker classification going forward, even in other business verticals such as high tech, the pharmaceutical industry and more.
The Workforce Landscape Has Changed Immensely in 2020
In a recent TalentWave survey, we found that 63% of HR leaders communicated that COVID-19 will move them to develop long term Work From Home (WFH) strategies for their employees. There is also a sizeable movement to engage more contingent workers who can be onboarded and offboarded rapidly, providing more flexibility for companies. This will no doubt, have an impact on the number of workers engaging as a 1099, and will potentially create new legislation and the need to watch case law more attentively. While WFH is being embraced at levels never seen before, this will also have bearings on worker classification in the near term and we will be watching this closely and acting on the inevitable changes that result.
Don’t forget our webinar on July 22nd where we’ll discuss this and more. Register now!