1099 Risk Blog

New Poll on Size of Contract Workforce

How big is your contract workforce? What proportion of your organization's workforce could be considered contingent or is contract-based? Please take a moment to visit our poll on LinkedIn: http://polls.linkedin.com/p/18415/hzyaj

In your answer, please include temps, independent contractors, seasonal hires, independent consultants, and single-person vendors. Essentially, consider anyone who is performing work in your organization that is not a "traditional" employee. Thanks for your help!

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E-Verify Delayed; Written Into Stimulus Package

The effective date of the E-Verify requirement for federal contractors has been delayed yet again to May 21. While some business groups are hoping the Bush-era rule will be reviewed and rejected by the Obama administration, other signs promise that, delay or no, E-Verify is here to stay. The House version of the economic stimulus package requires E-Verify for recipients of federal assistance. E-Verify is a free online system via DHS that employers can use to electronically check the immigration status of workers. For federal contractors that sub-contract work or hire independent contractors, 1099s, and single person companies, E-Verify raises new compliance issues that will need to be addressed.   

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Contractor Classification Tip #3

Here's the MBO Partners Independent Contractor Classification Tip #3:

Don’t rely on software alone. 

Whether you conduct assessments in-house or through a third-party provider, know that the control factors are highly nuanced. Any compliance software must be considered a preliminary step, and compliance determinations should be reviewed by a trained and experienced compliance officer.

<a href="http://technorati.com/claim/t9374air3t" rel="me">Technorati Profile</a>

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Iowa Takes Action on Contractor Misclassification

According to the Des Moines Register and other sources, Governor Culver is endorsing a recent report by Iowa's Task Force on independent contractor misclassification, and taking action on the matter. The state will be hiring 9 full time employees and spending $771,000 a year to crack down on the willful practice of misclassifying employees as independent contractors. Iowa joins many other states in addressing the issue. 

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Contractor Classification Tip #2

Here's our independent contractor classification tip #2:

Get Expert Guidance. 

Use a third-party compliance firm that is current with the complex regulations and risk factors. Select a firm that has extensive experience in compliance and that will indemnify you from tax reclassification risk if the contractor is reclassified. If you assess compliance in-house, seek the expert advice of an experienced law firm to ensure that your program is in line with the most up-to-date case law and court sentiment. 

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Contractor Classification Tip #1

With the new year afoot, MBO Partners would like to offer you our quick series of essential tips for proper independent contractor classification. Here's our first tip, as we've found a contractor compliance program is only effective to the degree you actually run compliance on anyone who might be subject to reclassification.

Tip #1:

Run compliance on all incumbent and new contractors. 

Even small corporate entities of one or a few employees could be subject to reclassification. Compliance must therefore be run on all your 1099s, including self-incorporated consultants and small Statement of Work (SOW) vendors or project teams. To minimize the business disruption, consider a phased approach starting with new contractors, and once that part of the program is under control, begin to run compliance on your incumbent contractors with each new work order or contract renewal.

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