W-2s vs. 1099s - Who Should be an Independent Contractor

Background:

It started out seemingly a good idea. Getting on board with the gig economy. Having a just in time workforce when you needed and not when you didn’t. Cutting overhead, payroll and benefit costs by maximizing your use of independent contractors. Lowering your employment risk by having people to perform work who were not actually employees.

Having a flexible workforce comprised of non-employees that you don’t have to pay when you don’t need them to work is almost irresistible to pass up. Add in the idea of not having to worry so much about pesky “HR” considerations and it seems almost too good to be true. Well as with most things, if it seems too good to be true, it very well may be too good to be true. What you classify as independent contractors may in fact be your employees, and you can end up with problems you never even considered. Problems that never crossed your mind when you were dreaming of all the advantages.

Why Should You Attend?

Many employers think only of one thing when deciding to use independent contractors. Costs. Cutting costs. Two main costs - payroll and overhead. No, overtime either. If they hurt themselves at work, it’s their own dime. After all some employees are even begging to be an independent contractor. What could go wrong? Lots.

As Mom said, it’s all fun and games until someone gets hurt. In these situations that will usually be the employer. Back taxes with hefty penalties, workers comp claims, even problems with benefits that should have been provided. What started as a good idea becomes a nightmare of what are added costs including the added costs of tax attorneys and CPAs that the employer will pay to dig them out of the hole they may have dug for themselves.

Course Description

Using independent contractors certainly has its place and is not an altogether bad idea, an idea that can offer many advantages to both employers and small businesses. However, the business relationship that exists between a company and the person performing the services must be a legitimate one.

According to the IRS, whether these people are independent contractors or employees depends on the facts in each case. To quote the IRS, “It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors".

“Correctly” is the problematic word. Even employers who thought they had considered carefully find to their dismay they only considered one side of the situation and forgot other considerations. Alternatively, the employer dazzled by dollar signs, defined key terms advantageously for themselves according to their own personal definition, rather than how a regulatory agency used or defined them.

There are also additional agencies, factors and tests that need to be considered and reviewed before setting up that independent contractor relationship. Many employers believe if there is a contract that the determination is made. While having a contract helps, it is not the final determinant. Because if it looks like a duck, quacks like a duck and walks like a duck, having a contract that states otherwise may be of little help.

Areas Covered in the Webinar:

  • How independent contractors can cause compliance challenges.
  • How independent contractors can cause other operational challenges.
  • It’s all fun and games until someone gets hurt – problems you probably haven’t even considered
  • What the IRS scrutinizes in independent contractor arrangements.
  • It’s about control. Defining control.
  • Employees have options too.
  • The Department of Labor’s view.
  • Don’t forget the state.
  • How the EEOC could get involved.
  • Independent contractor’s Dos and Don’ts
  • Common, and very serious mistakes
  • Temporary employees. Whose employee are they?
  • What about the employee who "wants" to be an independent contractor?
  • Balancing HR challenges with business considerations

Who Will Benefit:

  • Payroll Professionals
  • Human Resources Personnel
  • Accounting Personnel
  • Business Owners
  • Lawmakers
  • Attorneys
  • Any individual or entity that must deal with the complexities and technicalities within the payroll process

Our Speaker

Teri Morning

Teri Morning, MBA, MS, specializes in solving company “people problems.” Teri is the founder and President of Hindsight Human Resources.www.hindsightcloud.com Teri also sources HR software solutions for incident tracking, employee relations, safety (Incident Tracker), compensation (Compease) and performance management (Performance Pro). Twenty+ years human resource and training experience in a variety of fields, including retail, distribution, architectural, engineering, consulting, manufacturing (union), public sector and both profit and non-profit companies. Teri has enjoyed consulting with employers on their problems and trained managers and employees for over 20 years, meeting and working with employees from all types of businesses. In addition to a MBA, Teri has a Master’s degree in Human Resource Development with a specialization in Conflict Management. Teri was certified by the State of Indiana in mediation skills, and Teri is currently certified in Project Management and IT Management and qualified as a Myers-Briggs practitioner. Teri has held the PHR, SPHR, SPHR-CA and SHRM-SCP certifications.

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