written on September 07, 2010 by Scott Lawson
The federal government has recently renewed its commitment to ensure that employers who classify workers as independent contractors do so properly. Approximately $25 million in additional federal funds have been ear-marked for increased investigations into worker misclassification issues. Now, more than ever, employers should review existing classifications as well as their classification practices going forward.
Unfortunately, there is no easy way to determine whether a particular worker has been properly classified as an independent contractor. The precise definition of an independent contractor varies between federal agencies as well as between state and federal law. Including language in a contract stating that a worker is an independent contractor may help to minimize employer liability for injuries to third parties, but it does not provide a fail-safe defense in the face of a government investigation. Those investigations will focus instead on the worker’s specific job functions and the worker’s relationship to the company.
Penalties for worker misclassification can be severe. These may include heavy fines, back taxes and interest, as well as back pay and benefits. While an employer should always review new job classifications with counsel, employers should also periodically conduct a legal audit of all classifications to ensure continued compliance.
Scott Lawson, Esq.
The Lawson Firm, LLC
www.lawsonfirm.net
P: (440) 666-9735
F: (440) 892-3396
The Lawson Firm, LLC
Gemini Towers
1991 Crocker Road, Suite 600
Cleveland, Ohio 44145