16 oct Worker Classification Agreement
Classifying an employee as an independent contractor should always be an informed and bona faith business decision, not a deception to circumvent the employer`s obligations to employees. Incorrect classification of a person as an independent contractor can result in various responsibilities. See Misclassification of Independent Contractors Can Be Corrected. « Typically, a company must reimburse taxes as well as fines and penalties that may be based on the number of IRS W-2 forms that the company was unable to file due to misclassification and a percentage of wages when the company did not withhold the correct taxes, » Harman said. If the presumed agreement of an independent contractor exists between two organizations, that is, between the organization that receives the services and the organization that actually employs the workers, there is a risk that a joint employer exists – a legal relationship in which the client and the contractor can be held liable for violations of labor law. See How to minimize hooks at the recruitment agency. To better determine how to properly classify an employee, consider these three categories – behavioral control, financial control, and party relationship. A misclassified employee may result in the alleged employer being liable for workplace injuries outside of workers` compensation system protection, as well as for penalties. In addition, an April 2019 statement letter from the U.S.
Department of Labor (DOL) estimates that at least some workers in the on-demand economy who find employment through smartphone apps — such as drivers for ride-sharing services — are not covered by the Federal Fair Labor Standards Act (FLSA). The DOL concluded that workers who use a technology platform or « virtual marketplace » to communicate with consumers – as described in the request for advice – are independent contractors and not employees of the platform provider. You see, DOL says that some workers in the on-demand economy are not white-collar workers. Hiring a contract worker could save a company money on salary, health benefits, paid leave, etc., but there are restrictions on hiring a contract worker through an hourly or salaried employee and vice versa. .