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Upcoming Events
June 24, 2008 | 12:00 PM ET
The Dark Side of the Moon: Do You Really Know Your Contract Workforce?
The use of contract workers has grown fivefold since the 1980's, and nearly four out of five employers hire contractual help. The implications of the contingent work force have taken a radical turn in the past decade. The globalization and flattening of the world economy, the aging of the US workforce, and the demand for increased flexibility and mobility-these are only several of the factors driving the changes in CWM. Join us for this fascinating HCI webcast that will examine who your contract workers are-both today and in the future. We'll examine what drives the contingent worker, and how you can best capitalize your ROI. Presented by Dana Shaw of Staffing Industry Analysts.
Talk With Our Experts
Call 1-800-220-0469, or complete this form. Our experts will be in touch promptly.
1099 Risk Blog
1 2 Next >Technologies Reconcile State & Federal Tax Returns
Today's news feed reveals that the state of Rhode Island is getting serious about recouping its tax gap -- that difference between the taxes collected and the taxes owed. New technology and the innovation available through a public-private partnership are enabling Rhode Island to feed IRS federal tax data into a data warehouse along with state tax return records, and then mine that data to look for discrepancies.
RI expects to recover around $10 million in uncollected taxes, targeted at independent consultants, contractors, and small businesses.
rhode island, RI, IRS, taxes, tax gap, contractors, consultants, 1099, small business, technology
State Enforcement
Michigan and Maryland Eye Misclassification
Michigan and Maryland are joining other states in bringing increased scrutiny at the local level toward the classification of workers as either contractors or employees. The employee misclassification debate is now heating up across the country, with most agencies now labeling misclassification as a pervasive form of tax evasion.
2008 is the year for businesses to come to terms with the fact that agencies at every level -- local, state, and federal -- are looking to recoup lost payroll tax revenue. They are awake, they are sharing information, and they are considering it well worth their effort to go after it.
contractor classification, employee or contractor, michigan, maryland, state, enforcement, risk
State Enforcement
PA Bill to Make Misclassification a Felony
A Pennsylvania bill that would make the misclassification of employees as 1099 independent contractors a felony is making progress after passing in the House on Monday.
"Misclassifying employees as independent contractors is a tax-evasion strategy," the bill's sponsor, Delaware County Democrat Rep. Bryan R. Lentz said. "Until we impose harsh penalties on the practice, workers and law-abiding employers will continue to get cheated. When we allow some unscrupulous employers to avoid responsibility to their workers, we allow them to gain a competitive advantage over the vast majority of employers who do play by the rules and who do treat their employees fairly."
Co-Employment Risk: The Microsoft Problem
Don't miss this free executive webcast titled ”Co-Employment Risk: Inoculating Your Organization Against a ‘Microsoft’ Problem.”
Presented by two leading co-employment law experts, this webinar outlines best practices businesses can incorporate to maximize compliance and shield themselves from co-employment lawsuits -- while guiding attendees away from practices that are not only ineffective, but potentially counterproductive.
Wednesday, June 11th
1:00 PM ET
House Bill Would Penalize Misclassification
The flurry of introduced legislation intended to address employee misclassification continues: A new bill introduced in the House by Democratic Representatives Woolsey and Andrews would penalize employers who improperly classify their employees as contractors to save on payroll taxes, benefits, and other costs.
The Employee Misclassification Prevention Act would amend the Fair Labor Standards Act to clarify language around employee -- contractor classification [i.e., whether individuals should be paid as a W2 or a 1099], increase reporting and communications between the . . .
legislation, IRS, DOL, classification, contractors, employees, information sharing, enforcement
Legislation
New Hampshire Added To List of States Cracking Down on Contractor Misclassification
New Hampshire can now be added to the list of states (including CA, NY, and MA), putting together special task force initiatives to crack down on improper contractor classification.
As reported in today's Nashua Telegraph:
"Labor Commissioner George Copadis said Wednesday his department has received enough complaints about the practice that it is has teamed up with four other state agencies, including the attorney general’s office and the Department of Revenue, to look in to how big the problem really is.
NH, New Hampshire, state, enforcement, 1099, classification, reclassification, misclassification, contractors, employees, worker's compensation
State Enforcement
Rep. McDermott introduces new worker classification legislation
Turning up the heat:
Proper classification of contractors and employees continues to hit the headlines on a regular basis, and the latest news is the release of yet another legislative effort to eliminate worker misclassification and help state and federal tax agencies recover more revenues without raising taxes. Representatives McDermott, Tierney, and Neal introduced The Taxpayer Responsibility, Accountability, and Consistency Act in session yesterday. Adding fuel to the fire, the labor Unions have issued a variety of press releases today praising the measure. The Unions argue that misclassification as contractors prevents workers from being able to join and therefore infringes on their right to organize.
Granted that this is an election year and a variety of powerful lobbies (and not just the unions) are interested in passing this kind of legislation, interest and pressure in the topic of worker classification will only increase in the coming months.
We'll be adding this bill to our Legislation Tracker page as soon as it becomes available on GovTrack, so stay tuned to these pages!
risk, 1099, Tierney, Neal, McDermott, independent contractors, legislation, reclassification, misclassification, worker
Legislation
MA Governor Cracks Down on Misclassification
One by one, the states are turning up the heat on independent contractor classification. On March 12, 2008, Mass. Governor Deval Patrick signed Executive Order 499 creating a joint task force to identify and crack down on illegal misclassification of workers as independent contractors.
"Through joint efforts, the Task Force is charged with combating the underground economy and employee misclassification, including efforts to: (a) foster compliance with the law by educating business owners and employees about applicable requirements; (b) conduct joint, targeted investigations and enforcement actions against violators; (c) protect the health, safety and benefit rights of workers; and (d) restore competitive equality for law-abiding businesses."
State Enforcement
New GAO Report: Contractors as Contract Specialists
The GAO released a new report yesterday highlighting the use of contractors to serve as defense contract specialists, managing procurement. In just a few short years -- since 2003 when the Center for Contract Excellence (CCE) began using contractors in this role -- their contractor population has swelled to 42% of CCE's contracting force.
Get the report here:
GAO, defense, contracting, center for contract excellence, government, conflict of interest, contractor risks
Papers
Obama's IC Bill Still In Committee
Senator Obama's Senate bill confronting independent contractor classification is currently in the Senate Finance Committee. In case you haven't been tracking this issue, the bill was introduced last September and would allow the U.S. Treasury to wield a whole lot more power than it currently does. In one sense it would 'take the muzzle off' the dogs of enforcement. In addition, the bill will also eliminate the "everybody's doing it" defense of industry practice as a justification for worker misclassification.
If the bill becomes law, it would dramatically shift the landscape of contractor classification. Industries known to habitually misclassify workers would be fair game for investigation, and information for workers about proper classification would be added to the Department of Labor's workplace signage to help make sure every worker understands their labor rights.
Legislation
