Gig Economy: Sobering News on the Drunken Employer Soiree Called Misclassification

Welcome to the gig economy, where worker classification is as easy as running in quicksand and getting sued is as likely as the Patriots playing the Superbowl.

A gig economy, according to Investopedia, is one where “temporary, flexible jobs are commonplace, and companies tend toward hiring independent contractors and freelancers instead of full-time employees.”

While this work model is applauded by millions of Americans who get to set their own hours and choose work assignments, all this contractor revelry could have a ‘call the cops and hide the booze’ ending for employers.

Hiring independent contractors raises a case-load of compliance issues in terms of-

  • Immigration compliance rules
  • Worker safety
  • Accuracy of job descriptions
  • Non-taxable benefits
  • Federal and State tax implications

At the top of the ‘uh-oh he’s a temp’ list is worker misclassification. Classification of employees has a trickledown effect to all the areas listed above. When an employer mistakenly classifies a person as an independent contractor rather than an employee, they can end up responsible for back overtime pay, payment of that person’s federal and state taxes, and face non-compliance fines.

The good news is employers can avoid a misclassification hangover by carefully managing job descriptions and classifications. The solution is a multi-step process according to SHRM. Four key steps include:

  1. Use written independent contractor agreements that include language “that helps establish the bona fides of the classification as an independent contractor.”
  2. “Ask the worker to indemnify the organization for any losses resulting from misclassification.”
  3. “Use a checklist to make sure all details regarding management of independent contractors are being handled.”
  4. Do not treat independent contractors like regular employees.”

Still a little hazy on how to avoid costly misclassification mayhem?

No worries, the recorded webinar ‘Reclassifying Exempt Employees: Ensuring Wage and Hour Compliance’ will ease those after-party jitters with real-life advice from noted employment law expert Jeffrey M. Landes of Epstein Becker Green.

Plus, sign up now and you get a FREE bonus report ‘Reclassifying Exempt Employee: Tips, Tools, and Techniques to Ensure Wage and Hour Compliance’.

By V.L. Brunskill

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