While many things remain in question right now, one thing we know for sure is that each year takes us ever further from the traditional employment model of our ancestors. As always, when things rapidly change, there’s a period of trial and error (emphasis on the trial) while we figure things out. What’s been changing (and getting litigated) in this case, has everything to do with how companies classify workers.
Worker classification battles are waging and the cost to companies is staggering. While many companies have long played the odds–liberally classifying workers as independent contractors to save money and hassle–the odds keep tipping more in favor of the house. This list identifies the major worker classification disputes (and corresponding fines) that played out in 2021 alone. The cost is staggering.
As we stare down whatever lies around the bend, one thing is for sure: the government cares about worker classification issues and it’s one area they are very efficient in! Sate labor departments and the IRS share information to identify companies that are misclassifying employees as independent contractors. The number of audits and corresponding fines has been climbing steadily since 2010. The risks of non-compliance are high.
I understand that as we are continually adapting to changing environments, we are also desperately trying to fit all of our management tasks onto our already full plates. The increase in demand and uncertainty leaves even more reasons to get serious about a process for managing our contractors, freelancers, and consultants. Fortunately, every challenge can be overcome with the right game plan and the right partners. In this case, a partner that specializes in worker classification and payroll can turn some of the most dizzying and high stakes aspects of your business into a breeze. Pinky promise!