Laura Brandt - The Retail Lawyer
1099 Independent Contractor
** For General Information Purposes Only. This Is Not Legal Advice. **
In recent years, there has been a trend towards workers being classified as independent contractors as opposed to employees. It has been such a growing trend that we all know the phrase ”gig economy.” Although there are advantages to classifying workers are independent contractors, businesses need to be careful when engaging workers as independent contractors as government agencies are paying closer attention and challenging such arrangments more frequently. There are several states including, but not limited to, California and New Jersey who have enacted stringent statutory requirements in order for a worker to be classified as an independent contractor. Florida has enacted provisions within its labor code specifically addressing drivers who claim to be indepdendent contractors.
When looking to hire workers, you need to consider federal law, IRS standards as well as state and local laws that may be applicable.
Generally speaking, even if the business and the worker agree in a signed writing that their arrangement is one of an independent contractor, that doesn’t mean that the Department of Labor, IRS, Unemployment Insurance Board, or Workers Compensation Board will agree with your classification. If they disagree, you may be subject to back wages, penalties and fines.
The basics to consider are:
- Scope of Work
- Type of Payment
- Control of Schedule
- Project Based
- Equipment
- Location of Services
- Invoicing
Practically speaking, if the Department of Labor questions the status of a worker as an independent contractor (at least in NYS), the following items will carry a lot of weight in validating the independent contractor classification:
- Business Entity
- Other Clients
- Advertising
- General Liability Insurance
- Ability to Turn Down Assignments
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Be careful. Protect yourself. Be honest when assessing the classification of your workers. This can be a very expensive mistake.
Quick Link for YouTube Video of Laura Brandt talking about 1099 Independent Contractors:
https://www.youtube.com/watch?v=8dxBtJwO6Ng&feature=youtu.be
