Many businesses engage contractors for all kinds of work: truck drivers, real estate agents, the construction trades, computer programmers, virtual firms with work-at-home business models, Avon/May Kay reps, real estate agents, Fed Ex drivers, seasonal accountants…the list goes on. Unfortunately, many major corporations have misclassified employees as independent contractors (IC’s) in an effort to avoid paying benefits.
Proposed federal legislation is aimed at that situation, but has the unintended consequence of adversely affecting small businesses, self employed individuals and businesses that legitimately need a means to engage casual/intermittent/freelance labor in order to meet market demands. Several states have also taken the initiative to remove Independent Contractor classifications, thereby reclassifying contractors as employees and then billing the business for back taxes, insurance, workers comp insurance, etc. Even if your attorney has approved your business model and employment practices, you cannot assume your company is protected, as many of the laws surrounding IC status are subject to interpretation federally and within each state.
If your business engages independent contractors, you may wish to review Senate Bill 2882 and its companion House legislation H.R. 3408. While this issue has come up several times in the last decade, it is wise to consider that it has more “legs” this year. Similar legislation was proposed two years ago by then-Senator Barack Obama. Officials at the Department of Labor and the National Labor Relations Board are behind the legislation and many states are revenue-strapped and, thus, may jump on this bandwagon, as New York, Florida and Ohio already have. This legislation is detrimental to many small businesses whose voices should be heard in this debate.