Is Automation Helping Your Workforce Management or Leaving You Open to Risk?
AI and automation are changing how teams manage contingent workforces — but they can’t replace human judgment on classification, compliance, and payroll.
The legal battle over which workers can be classified as independent contractors versus employees is nowhere near close to over. Wherever the battles land, one important fact remains: The IRS takes the practice of hiring independent contractors very seriously. That means companies should, too.
While hiring an independent contractor is attractive for the potential money savings that come with outsourcing work that is not central to their main line of business, mistakes can quickly override any savings.
The IRS has very strict guidelines that define true business-to-business relationships. These guidelines are meant to prevent firms from misclassifying would-be employees, thereby avoiding a bounty of state and federal taxes. Making a misstep can be costly—whether it was intentional or not.
There is big-time tax money at stake. According to the court’s ruling on the landmark worker classification Dynamex decision, “the misclassification of workers as independent contractors rather than employees is a very serious problem, depriving federal and state governments of billions of dollars in tax revenue.” That’s billions with a B.
Small businesses can avoid certain taxes with fewer employees and independent contractors can write off business expenses and may also underreport their income. Hence the resulting “deprivation.” The IRS is motivated to recoup those lost dollars.
Audits and court costs alone are expensive and time-consuming even for businesses that do everything by the book. If you’re found in error, back pay adds up quickly. How much are you willing to pay in time and hassle alone?
If you have any questions about independent contractor status, trust PayReel to help you make the determination. We screen each employment situation carefully to assess the entire e relationship to make sure you are in complete compliance.
Call us at 303.526.4900 or email [email protected].
AI and automation are changing how teams manage contingent workforces — but they can’t replace human judgment on classification, compliance, and payroll.
The adage goes “If you want something done, ask a busy person.” If you are the person that always gets asked, it might be time to think about how to multiply your time using the art of delegating. Engaging a partner for events, worker management, and payroll is one of the quickest ways to increase bandwidth […]