Independent Contractors: A Thing of the Past, or Just a More Cautious Future?

Source: Ari Karen, Employee Benefit Plan Review, June 2008

… Now, a perfect storm of political change, increased union pressure, and aggressive government enforcement has developed. Premised on flawed assumptions that businesses force the contractor classification onto workers to pay lower wages, avoid benefits, and hire undocumented workers, a sustained “grass-roots” movement opposing business’ use of contractors is dictating federal and state policies. State legislatures in New York, Illinois, Texas, Oklahoma, New Jersey, Connecticut, Massachusetts, California, Michigan, Georgia, and other states have passed tougher standards for evaluating the independent contractor classification, and/or developed coordinated inter-governmental enforcement task forces. Numerous jurisdictions have initiated crackdowns against certain industries and passed or proposed legislation holding businesses and owners civilly and criminally responsible for misclassifying workers. Recent studies by the U.S. Government Accountability Office showing that millions of dollars in tax payments to state and local governments are being lost annually as a result of misclassification will only further fuel this trend.

Leave a Reply