This document discusses the differences between classifying workers as employees or independent contractors. It summarizes the common law test used by the IRS to determine worker classifications, focusing on behavioral control, financial control, and the type of relationship between the worker and the hiring entity. The three main factors of behavioral control, financial control, and the type of relationship provide evidence to determine if a worker is an employee or independent contractor. The document also discusses reporting requirements for employees versus independent contractors and how misclassifying workers can trigger an audit.
Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series
Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber
Employment lawsuits and government audits and investigations are at a record high. In 2013 the government settled the largest immigration fine in history with a Plano, TX based company in the amount of $34 million for charges of visa and I-9 non-compliance. Avoid the penalties, damages, and negative publicity for those who have been caught unaware. Regardless of size or industry, your company must be able to prove its observance of federal and state employment laws and regulations concerning both domestic and foreign workers. The Frisco Chamber of Commerce International Business Council and Cowles & Thompson, PC presented three educational events to help your organization meet regulatory challenges for your domestic and foreign employee workforce.
This is the third event - Best Practices for Business - held on August 6, 2014 at the Frisco Chamber of Commerce, Frisco, Texas.
20 Factor Test Employee Or Sub Contractordmaaskant
This document gives greater detail on the 20 Factors the IRS and other taxing agencies use during an audit. Much more clear than the IRS publication, but note - not published by the IRS.
Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series
Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber
Employment lawsuits and government audits and investigations are at a record high. In 2013 the government settled the largest immigration fine in history with a Plano, TX based company in the amount of $34 million for charges of visa and I-9 non-compliance. Avoid the penalties, damages, and negative publicity for those who have been caught unaware. Regardless of size or industry, your company must be able to prove its observance of federal and state employment laws and regulations concerning both domestic and foreign workers. The Frisco Chamber of Commerce International Business Council and Cowles & Thompson, PC presented three educational events to help your organization meet regulatory challenges for your domestic and foreign employee workforce.
This is the third event - Best Practices for Business - held on August 6, 2014 at the Frisco Chamber of Commerce, Frisco, Texas.
20 Factor Test Employee Or Sub Contractordmaaskant
This document gives greater detail on the 20 Factors the IRS and other taxing agencies use during an audit. Much more clear than the IRS publication, but note - not published by the IRS.
How to Avoid Emerging Wage & Hour Risks: Exempt or Non-Exempt, Contractor Lia...Carlton Fields
• What revamped DOL regulations regarding overtime pay and the white-collar exemptions could mean for how employers evaluate and classify exempt jobs;
• The most likely job classifications/duties that could spark scrutiny by the DOL and the courts—now and going forward—for overtime exemption misclassifications;
• Practical tips for how to tell if employer’s exemption classifications are in need of an overhaul under current FLSA regulations;
• The legal risks of designating employees as independent contractors and recent cases illustrating the key trouble spots that could lead to costly lawsuits and settlements; and
• How to evaluate and reduce liability related to payroll policies, including best practices for ramping up audits of overtime exemption and independent contractor classifications.
Employee vs. Independent Contractor - How to Differentiate and Avoid Penalties?benefitexpress
This presentation reviews: which factors the IRS uses to determine common law employee status | how does this affect compliance with ACA | what penalties may apply.
Because growing employers are typically focused on the “big stuff,” such as profitability and selling their products and services, they sometimes overlook the seemingly “small stuff,” such as complying with detailed and employee-oriented state and federal labor laws. As growing employers transition to large employers, they often carry with them legacy policies and practices that violate seemingly trivial provisions that nevertheless come with steep penalties that can reach into the millions of dollars. Plaintiffs’ lawyers know this and are targeting growing employers with growing pocketbooks.
Contractor or Employee? Exempt or Non-Exempt? Understanding the Distinctions ...ComplyRight, Inc.
A handful of high-profile cases -- and increased attention by the IRS and Department of Labor – has put worker classification in the spotlight. Now, more than ever, employers must be crystal clear on the differences between an employee and independent contractor, as well as exempt vs. non-exempt status.
In either case, misclassifying workers is a risk your business can’t afford to take. Federal and state agents are monitoring the situation more closely and cracking down with bigger fines and penalties. At the same time, wage and hour lawsuits are on the rise, with many “salaried” employees recognizing they are non-exempt in the eyes of the law -- and therefore owed overtime.
Protect yourself from costly misclassification mistakes and potential legal issues. Attend this timely webinar to learn:
- Factors that define the worker relationship, according to the IRS and Department of Labor
- Warning signs that your contractor is actually an employee under the law
- What determines exempt vs. non-exempt status (Hint: Job title has nothing to do with it.)
- Steps to take if a worker is misclassified
In this webinar you will be able to understand purpose and definition of Fair Labor Standards Act. We will cover minimum wage and overtime requirements and exemptions. Ways to properly determine overtime eligibility as well as understanding the employer responsibilities under FLSA and learn best practices on defending against FLSA claims or lawsuits.
The first of its kind, this seminar is held to provide participants with information and knowledge regarding a constructive dismissal where employee resigns as a result of the employer creating a hostile work environment.
Calculation of Damages in Wrongful Termination LitigationThomas Econometrics
When evaluating the economic damages in wrongful termination litigation, the central question being addressed consists of two components:
1. What is the likely compensation (including benefits) that the plaintiff would have earned but for the alleged wrongful termination;
2. What is the likely compensation (including benefits) that the plaintiff can be expected to earn from alternate employment given the alleged wrongful termination.
The amount of damages is equal to the difference between the two compensation streams. The task at hand, then, is to appropriately calculate the two
compensation streams.
What is FLSA?
Fair Labor Standards Act (FLSA) :
Sets standards for minimum wage and overtime pay.
Establishes record keeping standards.
Prescribes child labor standards.
FLSA does not regulate:
vacation, holiday, severance, or sick pay.
meal or rest periods, holidays off, or vacations.
premium pay for weekend or holiday work.
pay raises or fringe benefits.
discharge, termination, or final payment procedures.
Exempt and Non-exempt Employees
Exempt employees- Employees who meet one of the FLSA exemption tests and who are paid on fixed salary basis, not entitled to overtime.
Non-exempt employees- Employees who do not meet any of the FLSA exemption tests and are paid on hourly basis and are covered by wage and hour laws regarding minimum wage, overtime pay and hours worked.
Test for Exemption
To qualify for exemption, employees must meet certain tests regarding their:
Salary Level:
minimum salary level required for exemption is $455 per week
Job Duties- Categories of Exemption:
Executive Employees
Administrative Employees
Professional Employees
Outside Sales Employees
Computer Employees
Independent Contractors
FLSA does not cover independent contractors. Therefore, its important to learn to distinguish between an independent contractor and an employee.
The Supreme Court considers the following factors significant in determining an employee’s role versus that of an independent contractor:
the extent to which the worker's services are an integral part of the employer's business.
the permanency of the relationship.
the amount of the worker's investment in facilities and equipment.
the nature and degree of control by the principal.
the worker's opportunities for profit and loss.
the level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the enterprise.
Want to learn more about FLSA, its requirements and best practices to comply with them? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
Fair Labor Standards Act: Are Your Employees Classified Correctly?
The In's and Out's of FLSA
How to Conduct FLSA Classification Self-Audit
Avoiding Costly Wage and Hour Problems
How to Pay Overtime Correctly under FLSA
Handling Supplemental Pay Under the FLSA
For more Details Visit us at:http://www.complianceonline.com/classifying-employees-under-flsa-webinar-training-703602-prdw?channel=flsappt
From the ACA, upcoming changes to the FLSA, OSHA penalties, and other ongoing compliance issues, HR and compliance managers have a lot on their plate in 2016. Join us as we cover tips, best practices, and how to use technology to better manage these issues and more.
Lean Start-up Business Tactics Seminar - HR Issues and Your Start-up UNHInnovation
Inevitably, you will need the services and/or skill sets of other people to get your business running. When you begin to add people to your lean start-up, the initial question will be whether or not each person will be an employee or independent contractor. This seminar will help you understand the pros and cons of each type of relationship, and the legal risks in one vs. the other.
If you hire even one employee, there are HR legal compliance issues you will need to address. This seminar also discusses the HR issues that are most important as you begin to add employees, such as:
-Your obligations under wage laws and employment verification laws
-Approaching incentive compensation
-Protecting your confidential information and trade secrets
Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series
Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber
Handout for Session I - Current Trends in Government Investigations
NCV 4 New Venture Creation Hands-On Support Slide Show - Module 4Future Managers
This slide show complements the learner guide NCV 4 New Venture Creation Hands-On Training by Bert Kirsten, published by Future Managers Pty Ltd. Visit our website at www.futuremanagers.net
How to Avoid Emerging Wage & Hour Risks: Exempt or Non-Exempt, Contractor Lia...Carlton Fields
• What revamped DOL regulations regarding overtime pay and the white-collar exemptions could mean for how employers evaluate and classify exempt jobs;
• The most likely job classifications/duties that could spark scrutiny by the DOL and the courts—now and going forward—for overtime exemption misclassifications;
• Practical tips for how to tell if employer’s exemption classifications are in need of an overhaul under current FLSA regulations;
• The legal risks of designating employees as independent contractors and recent cases illustrating the key trouble spots that could lead to costly lawsuits and settlements; and
• How to evaluate and reduce liability related to payroll policies, including best practices for ramping up audits of overtime exemption and independent contractor classifications.
Employee vs. Independent Contractor - How to Differentiate and Avoid Penalties?benefitexpress
This presentation reviews: which factors the IRS uses to determine common law employee status | how does this affect compliance with ACA | what penalties may apply.
Because growing employers are typically focused on the “big stuff,” such as profitability and selling their products and services, they sometimes overlook the seemingly “small stuff,” such as complying with detailed and employee-oriented state and federal labor laws. As growing employers transition to large employers, they often carry with them legacy policies and practices that violate seemingly trivial provisions that nevertheless come with steep penalties that can reach into the millions of dollars. Plaintiffs’ lawyers know this and are targeting growing employers with growing pocketbooks.
Contractor or Employee? Exempt or Non-Exempt? Understanding the Distinctions ...ComplyRight, Inc.
A handful of high-profile cases -- and increased attention by the IRS and Department of Labor – has put worker classification in the spotlight. Now, more than ever, employers must be crystal clear on the differences between an employee and independent contractor, as well as exempt vs. non-exempt status.
In either case, misclassifying workers is a risk your business can’t afford to take. Federal and state agents are monitoring the situation more closely and cracking down with bigger fines and penalties. At the same time, wage and hour lawsuits are on the rise, with many “salaried” employees recognizing they are non-exempt in the eyes of the law -- and therefore owed overtime.
Protect yourself from costly misclassification mistakes and potential legal issues. Attend this timely webinar to learn:
- Factors that define the worker relationship, according to the IRS and Department of Labor
- Warning signs that your contractor is actually an employee under the law
- What determines exempt vs. non-exempt status (Hint: Job title has nothing to do with it.)
- Steps to take if a worker is misclassified
In this webinar you will be able to understand purpose and definition of Fair Labor Standards Act. We will cover minimum wage and overtime requirements and exemptions. Ways to properly determine overtime eligibility as well as understanding the employer responsibilities under FLSA and learn best practices on defending against FLSA claims or lawsuits.
The first of its kind, this seminar is held to provide participants with information and knowledge regarding a constructive dismissal where employee resigns as a result of the employer creating a hostile work environment.
Calculation of Damages in Wrongful Termination LitigationThomas Econometrics
When evaluating the economic damages in wrongful termination litigation, the central question being addressed consists of two components:
1. What is the likely compensation (including benefits) that the plaintiff would have earned but for the alleged wrongful termination;
2. What is the likely compensation (including benefits) that the plaintiff can be expected to earn from alternate employment given the alleged wrongful termination.
The amount of damages is equal to the difference between the two compensation streams. The task at hand, then, is to appropriately calculate the two
compensation streams.
What is FLSA?
Fair Labor Standards Act (FLSA) :
Sets standards for minimum wage and overtime pay.
Establishes record keeping standards.
Prescribes child labor standards.
FLSA does not regulate:
vacation, holiday, severance, or sick pay.
meal or rest periods, holidays off, or vacations.
premium pay for weekend or holiday work.
pay raises or fringe benefits.
discharge, termination, or final payment procedures.
Exempt and Non-exempt Employees
Exempt employees- Employees who meet one of the FLSA exemption tests and who are paid on fixed salary basis, not entitled to overtime.
Non-exempt employees- Employees who do not meet any of the FLSA exemption tests and are paid on hourly basis and are covered by wage and hour laws regarding minimum wage, overtime pay and hours worked.
Test for Exemption
To qualify for exemption, employees must meet certain tests regarding their:
Salary Level:
minimum salary level required for exemption is $455 per week
Job Duties- Categories of Exemption:
Executive Employees
Administrative Employees
Professional Employees
Outside Sales Employees
Computer Employees
Independent Contractors
FLSA does not cover independent contractors. Therefore, its important to learn to distinguish between an independent contractor and an employee.
The Supreme Court considers the following factors significant in determining an employee’s role versus that of an independent contractor:
the extent to which the worker's services are an integral part of the employer's business.
the permanency of the relationship.
the amount of the worker's investment in facilities and equipment.
the nature and degree of control by the principal.
the worker's opportunities for profit and loss.
the level of skill required in performing the job and the amount of initiative, judgment, or foresight in open market competition with others required for the success of the enterprise.
Want to learn more about FLSA, its requirements and best practices to comply with them? ComplianceOnline webinars and seminars are a great training resource. Check out the following links:
Fair Labor Standards Act: Are Your Employees Classified Correctly?
The In's and Out's of FLSA
How to Conduct FLSA Classification Self-Audit
Avoiding Costly Wage and Hour Problems
How to Pay Overtime Correctly under FLSA
Handling Supplemental Pay Under the FLSA
For more Details Visit us at:http://www.complianceonline.com/classifying-employees-under-flsa-webinar-training-703602-prdw?channel=flsappt
From the ACA, upcoming changes to the FLSA, OSHA penalties, and other ongoing compliance issues, HR and compliance managers have a lot on their plate in 2016. Join us as we cover tips, best practices, and how to use technology to better manage these issues and more.
Lean Start-up Business Tactics Seminar - HR Issues and Your Start-up UNHInnovation
Inevitably, you will need the services and/or skill sets of other people to get your business running. When you begin to add people to your lean start-up, the initial question will be whether or not each person will be an employee or independent contractor. This seminar will help you understand the pros and cons of each type of relationship, and the legal risks in one vs. the other.
If you hire even one employee, there are HR legal compliance issues you will need to address. This seminar also discusses the HR issues that are most important as you begin to add employees, such as:
-Your obligations under wage laws and employment verification laws
-Approaching incentive compensation
-Protecting your confidential information and trade secrets
Avoiding Workplace Pitfalls: Domestic and Foreign Employee Compliance. Employment Law Breakfast Series
Sponsored by Cowles & Thompson, PC & The International Business Council of the Frisco Chamber
Handout for Session I - Current Trends in Government Investigations
NCV 4 New Venture Creation Hands-On Support Slide Show - Module 4Future Managers
This slide show complements the learner guide NCV 4 New Venture Creation Hands-On Training by Bert Kirsten, published by Future Managers Pty Ltd. Visit our website at www.futuremanagers.net
Evolution of National Family Planning Programme (NFPP) and National Populatio...Dr Kumaravel
This presentation discuss the evolution of India's National Family Planning Program and National Population Policy 2000, significant impact of 1994 Cairo conference on country's Reproductive health approach.
RMNCH+A is a NEW approach to address the health problems Mother, Newborn, Child & Adolescence simultaneously at different stages of life through 'CONTINUUM OF CARE'.
Hope this presentation will help to have a glimpse of the program.
Show Them the Money: Wage & Hour Compliance (Series: Protecting Your Employee...Financial Poise
Compliance with federal (as well as state) wage and hour laws returned to the forefront towards the end of the Obama administration when it appeared that the salary threshold that applied to exempt employees would be increased significantly. While the proposed change will not happen, the Trump administration has signaled that the threshold will nonetheless likely increase. Regardless of where the new threshold lands, employers must nonetheless be mindful of the risks posed by misclassifying individuals as exempt as well as by a host of practices that can imperil otherwise proper classification decisions. And while the federal government is no longer scrutinizing the use of independent contractors as closely today, employers must still be careful when relying on contractors. This webinar delves into the mistakes commonly made by employers and endeavors to provide attendees with the tools needed to help find and fix potential wage and hour pitfalls.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/employment-wage-hour-compliance-2020/
Wage & Hour Compliance (Series: Protecting Your Employee Assets: The Life Cyc...Financial Poise
Compliance with federal (as well as state) wage and hour laws returned to the forefront towards the end of the Obama administration when it appeared that the salary threshold that applied to exempt employees would be increased significantly. While the proposed change will not happen, the Trump administration has signaled that the threshold will nonetheless likely increase. Regardless of where the new threshold lands, employers must nonetheless be mindful of the risks posed by misclassifying individuals as exempt as well as by a host of practices that can imperil otherwise proper classification decisions. And while the federal government is no longer scrutinizing the use of independent contractors as closely today, employers must still be careful when relying on contractors. This webinar delves into the mistakes commonly made by employers and endeavors to provide attendees with the tools needed to help find and fix potential wage and hour pitfalls.
To view the accompanying webinar, go to:
1099 v. W-2 Employees: What to Know and Why It Matters
By Patricia Godfrey of Oasis Outsourcing (www.oasisadvantage.com)
Presented at the April 2012 Lighthouse Speaker Series (http://lighthousegrowthresources.com/speaker_series.html)
www.lighthousegrowthresources.com
www.uncommonwisdomblog.com
Independent Contractor or Employee: Avoiding the Game of Guess Whobenefitexpress
Uber is in the news for a multimillion dollar settlement following a dispute over whether their drivers are employees or independent contractors, and they aren’t the only ones. Misclassifying an employee as an independent contractor is one of the costliest mistakes an employer can make.
Sort out which your employees are and learn your options for reclassifying workers in the webinar you literally can’t afford to miss.
Compliance with federal (as well as state) wage and hour laws returned to the forefront towards the end of the Obama administration when it appeared that the salary threshold that applied to exempt employees would be increased significantly. While the proposed change will not happen, the Trump administration has signaled that the threshold will nonetheless likely increase. Regardless of where the new threshold lands, employers must nonetheless be mindful of the risks posed by misclassifying individuals as exempt as well as by a host of practices that can imperil otherwise proper classification decisions. And while the federal government is no longer scrutinizing the use of independent contractors as closely today, employers must still be careful when relying on contractors. This webinar delves into the mistakes commonly made by employers and endeavors to provide attendees with the tools needed to help find and fix potential wage and hour pitfalls.
Part of the webinar series: Protecting Your Employee Assets: The Life Cycle Of The Employment Relationship 2022
See more at https://www.financialpoise.com/webinars/
Welcome to the Team! Recruiting and Hiring, Including Restrictive Covenants (...Financial Poise
You only get one chance to make a first impression, so you want to make sure your company avoids unnecessary missteps when recruiting and hiring employees. Understanding what you can and cannot say during interviews and how to respond when a candidate volunteers information that may be considered “off limits” is essential. At the same time, there are a host of laws being passed throughout the country that address when and what sort of information you can request from applicants regarding their criminal and financial histories. In the event you decide to protect your organization by requiring certain employees to sign some type of restrictive covenants—non-competition, non-solicitation and/or non-disclosure—there are a host of legal and practical issues to consider. This webinar explores these and other issues so that you can be confident, going forward, that you are starting off on the right foot—legally, at least—when you hire new employees.
To listen to this webinar on-demand, go to: https://www.financialpoise.com/financial-poise-webinars/recruiting-and-hiring-including-restrictive-covenants-2020/
Welcome to the Team! Recruiting and Hiring, Including Restrictive CovenantsFinancial Poise
You only get one chance to make a first impression, so you want to make sure your company avoids unnecessary missteps when recruiting and hiring employees. Understanding what you can and cannot say during interviews and how to respond when a candidate volunteers information that may be considered “off limits” is essential. At the same time, there are a host of laws being passed throughout the country that address when and what sort of information you can request from applicants regarding their criminal and financial histories. In the event you decide to protect your organization by requiring certain employees to sign some type of restrictive covenants—non-competition, non-solicitation and/or non-disclosure—there are a host of legal and practical issues to consider. This webinar explores these and other issues so that you can be confident, going forward, that you are starting off on the right foot—legally, at least—when you hire new employees.
Part of the webinar series: PROTECTING YOUR EMPLOYEE ASSETS: THE LIFE CYCLE OF THE EMPLOYMENT RELATIONSHIP 2022
See more at https://www.financialpoise.com/webinars/
Recruiting and Hiring, Including Restrictive Covenants (Series: Protecting Yo...Financial Poise
You only get one chance to make a first impression, so you want to make sure your company avoids unnecessary missteps when recruiting and hiring employees. Understanding what you can and cannot say during interviews and how to respond when a candidate volunteers information that may be considered “off limits” is essential. At the same time, there are a host of laws being passed throughout the country that address when and what sort of information you can request from applicants regarding their criminal and financial histories. In the event you decide to protect your organization by requiring certain employees to sign some type of restrictive covenants—non-competition, non-solicitation and/or non-disclosure—there are a host of legal and practical issues to consider. This webinar explores these and other issues so that you can be confident, going forward, that you are starting off on the right foot—legally, at least—when you hire new employees.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/recruiting-and-hiring-including-restrictive-covenants-2021/
How to Classify Your Exempt and Non Exempt Employees Correctly June 15, 2016Allyson Lewis
On May 18, 2016 the Department of Labor released new rules that significantly impact how you pay your employees. Do you know the answer to which employee and which position will be exempt or non-exempt under the new rules?
Join us for an overview of the new DOL rules and a demonstration of the new Classification Wizard tool from KPA HRDrive. Using the Classification Wizard will allow you to quickly and easily determine which employees must be paid overtime, which employees must be paid minimum wage for all hours worked, and which employees are exempt from overtime. The Classification Wizard asks you a series of questions to help determine the appropriate employee classification quickly and easily, and also gives you access to certified HR professionals by phone or email at any point in the process.
The webinar will be presented by Kathryn Carlson, Vice President of HR Management Products. Kathryn has over 25 years of human resources management experience and is a certified HR professional. For the past 13 years she has focused on developing HR software and programs to improve efficiency, reduce risk, and ensure compliance for companies ranging from small businesses to international.
Significant changes to overtime regulations may 25 2016Allyson Lewis
Join us for this free webinar!
The DOL published the final version of the much anticipated overtime exemption rule. This means that 4.2 million salaried, non-manufacturing workers nationwide will now be entitled to overtime, with a direct cost to employers of almost $1.5 billion in increased employee earnings.
During the webinar you will learn:
• How do the DOL’s new overtime exemption rules impact the current salary basis test and the salary level threshold required for exemption?
• When will the DOL’s final rules take effect?
• What can you do right now to prepare for new FLSA compliance obligations?
• Should you convert exempt workers to hourly status rather than pay increased weekly base salary?
• Should you rewrite your job descriptions? If so, how?
• Is your organization prepared for increased recordkeeping?
• What tools and resources does KPA offer for clients to comply with the new rule?
Kathryn Carlson will be presenting this educational webinar. Kathryn has over 25 years of human resources management experience and is a certified HR professional. For the past 13 years Kathryn has focused on developing HR software and programs to improve efficiency, reduce risk, and ensure compliance for companies ranging from small businesses to international.
3. RCH Credit
• This is an APA approved program for 1 (one)
RCH
• You must attend the entire 1-hour course.
• You will be sent a certificate with the
program course code upon completion for
your file folder by no later than 9/21/12.
4. About the Speaker
Vicki M. Lambert, CPP, is President and Academic Director of Vicki M. Lambert, LLC, a firm
specializing in payroll education and training. Known as “The Payroll Advisor,” Ms. Lambert is
Founder and Director of www.thepayrolladvisor.com, a website that provides unique and expert
services for anyone dealing with the complexities and technicalities of the payroll process.
As an adjunct faculty member at Brandman University, Ms. Lambert is the creator and instructor for
the Practical Payroll Online payroll training program, which is approved by the APA for
recertification credits.
5. What We Will Cover Today
• Worker Classifications
• What is the common law rule and
how to apply it
• The Three Factors that apply to
worker status
• IRS v. FLSA on independent
contractors and employees
• Don’t forget the states have a say on
who is an employee
6. Covering Today
• Form SS-8
• Who gets a W-2 and who gets a 1099 and why the
twain should never meet
• What triggers a 1099 audit—its easier than you
think
• NRP Audits are winding down
• What are the penalties for misclassifying workers
• IRS’ VCSP in full swing
8. Common Law Employee
• Anyone who performs services for an
employer is an employee if the
employer can control what will be
done and how it will be done—a
matter of control
• Makes no difference how it is labeled
• Full or part time doesn’t matter
• No distinction between classes of
employees
9. Common Law Rule
• No exact statute stating who
is an employee
• Known as the common-law
rule
• If it walks like a duck…
10. Characteristics of Employees
• Employer provides instruction,
tools, supplies and training
• Employer can discharge
• Employee can quit
• Services are performed personally
• Continuous relationship
• Employer hires and pays assistants
and staff
11. What is an Independent Contractor?
• Are self employed
• Employees of no other entity
• You have the right to control or
direct only the result of the work
and not the means and/or methods
of accomplishing the result
12. Characteristics of an Independent
Contractor
• Sets own order and sequence of
work
• Works for more than one person or
firm
• Offers services to the general public
• Contract agreements are in effect
• Furnishes own tools
13. Determining Who Is an Employee
• IRS regulations are not spelled out in terms of one
law.
• Tests of characteristics, job duties and intent
• Boils down to the matter of control
• 20 facts are divided into three categories that
provide evidence of control
14. 3 Categories of Evidence of Control
• Behavioral Control
• Financial Control
• Type of relationship
15. Behavioral Control
Facts that show whether the
business has the right to direct
and control how the worker
does the task for which the
worker is hired.
16. Behavioral Control
Also includes type and degree of:
• Instructions that the business
gives to the worker
• Training given to the worker
17. Instructions
• Where and when to do the
work
• What tools and equipment to
use
• Hiring of assistants
• Providing supplies
• Order and sequence of work
18. What If No Instruction?
• Amount needed varies for different
jobs
• Behavioral control may exist if
employer has right to control how
work results are achieved
• Business may lack knowledge in
highly specialized fields
• Task may require little or no
instruction
21. Financial Control
• Extent to which worker has
reimbursed business expenses
• Extent of the worker’s investment
• Extent to which the worker makes
his or her services available to the
relevant market
• How the business pays the worker
• Extent to which the worker can
realize a profit or loss
22. Business Expenses
Employees are reimbursed for
business expenses
Independent contractors are not
Not a hard rule…of course!
23. Worker’s Investment
• Employees do not have an investment in the facilities
he or she uses
• Independent contractors usually do
• Again, not actually a requirement…but it helps!
24. Availability of Services
• Independent contractor’s
services are available to the
public
• They advertise
• The big Kahuna!
25. Paying the Worker
• Employees are generally guaranteed a regular wage
amount for an hour, week or other period of time
• Independent contractor is paid a flat fee for the job
• There are exceptions—i.e. lawyers
26. Profit and Loss
Employees are paid a wage
without deductions for costs of
doing business
Independent contractors would
have expenses to offset any
profits.
27. Type of Relationship
• Written contracts
• Benefits
• Permanency of relationship
• Key aspect of the regular business of the company
28. Written Contracts
Describes the relationship the parties intended to
create
NO! Having a written contract does not make a
worker an independent contractor
29. Benefits
• Does the company
provide the worker with
employee type benefits
such as insurance, a
pension plan, vacation or
sick pay?
• Yes – Employee
• No- Not necessarily an
independent contractor
30. Permanency of Relationship
Is the worker engaged with the
expectation that the relationship
will continue indefinitely rather
than for a specific project or
period?
Evidence the intent was to
create an employer-employee
relationship
31. Key Aspects of Business
If the worker provides services
that are a key aspect of the regular
business activity it is likely you
have the right to direct and control
his or her activities
Which means that they are an
employee
32. Pit Falls
• Consultants
Especially former employees or
retired employees
• Employees performing other
tasks
• Watch out for the states
Especially for SUI – May not
match IRS
33. Safe Harbors
• Section 530
• Reasonable basis test
• Must complete all federal
returns and provide Form
1099-MISC
• 5 tests
34. Five Tests for Safe Harbor
1. Court ruling or other judicial
precedent
2. Published IRS rulings
3. IRS technical advice or letter ruling
directed to that particular employer
4. Previous IRS audit that did not
result in penalties for same type of
position
5. Longstanding industry practice
35. Employee Vs. Independent Contractor:
Employees Under The FLSA
The test for determining whether an employer-
employee relationship exists under the Fair Labor
Standards Act is broader than the IRS common law
test.
36. Some of the Significant Factors Singled out by
the Court In Determining Employee Status Are:
• The extent of the individual's financial investment
in the facilities, tools and equipment used in
performing the job
• The degree in which the individual is economically
dependent on the employer's business. The
amount of control the employer has over the
individual's opportunity to realize a profit or
sustain a loss
37. Significant Factors…
• The extent to which the services are integrated
into the business
• The amount of initiative or skill level required for
the worker to perform the job
• The permanency of the relationship between the
employer and the individual providing the services
38. • Provided by IRS to help determine status
• They will review and give ruling-not the first choice
by most
• Easy to complete yourself--then apply the results—a
little safer in most cases
• There are state equivalents
• Let’s do a quick review of the form’s questions-see
where they are looking
40. On part 3, they’re looking for the control of the money.
41. In part 4, they’re looking for control in the relationship.
42. New for 2011 form:
looking closely at sales or service workers.
43. Employee Vs. Independent Contractor:
Reporting Requirements
Best time to
change over—
January 1
Employee: Independent Contractor:
Form W-2 Form 1099-MISC if
qualifies with $600 or more
for year
One worker should not get both in
the same year—can trigger audit
44. How Do I Get Caught?
• Random audit by IRS-not
likely unless you had more
than one form for a
worker—but they are
looking for it
• Audit due to other audits—
FLSA will get you IRS—
State will get you IRS
• They are teaming up on this
one—especially for SUI
audits
46. Employment Tax National Research Program Initiative
(ET NRP)
• Focus on independent contractors
• Auditing 6,000 employers over 3 year period
• Employers chosen at random—is this your lucky
day?
• Round 2 is done—Round 3 is now underway
• IRS will take prior action into account when
assessing penalties
• Non NRP audits are using the same exhaustive list
47. Employee Vs. Independent Contractor:
Penalties
If the IRS reclassifies an individual from independent
contractor to employee, the employer may be required
to pay penalties for the misclassification. Under the
IRS Code the penalties may be:
1.5% of the employee's federal income tax liability, AND
20% of the amount that should have been withheld for the
employee's FICA
48. Penalties…
If the employer failed to file the information
returns (e.g., Form 1099) before the
reclassification, the penalties double to 3% and
40% respectively.
Can get one time interest free adjustment on Form
941 failures
That’s just the IRS…there is a state involved there
somewhere
Many states have passed specific laws for
misclassification of employees…
49. For Example--Missouri
Sec. 285.515
If a court determines that an employer has
knowingly misclassified a worker, the court shall
enter a judgment in favor of the state and award
penalties in the amount of fifty dollars per day per
misclassified worker up to a maximum of fifty
thousand dollars. The attorney general may enter
into a consent judgment with any person alleged to
have violated sections 285.500 to 285.515.
50. New Program
• Voluntary Classification
Settlement Program
• Known as VCSP
• Rollout on September 21,
2011
51. Purpose Of Program
• Designed to increase tax compliance and reduce
burden for employers by providing greater certainty
for employers, workers and the government
• Permits taxpayers to voluntarily reclassify workers as
employees for federal employment tax purposes
• Program is optional
• Applies to future tax periods with limited federal
unemployment tax liability for past nonemployee
treatment
52. Eligibility
• Available for taxpayers/employers who want to
voluntarily change a prospective classification of
their workers
• Applies to employers who are currently treating
their workers as independent contractors or other
nonemployees
• Can be a worker or class or group of workers
• Employer must want to prospectively treat the
workers as employees
53. Eligibility Requirements
• Be presently treating the workers as non-
employees
• Have satisfied any Form 1099 requirements for
each of the workers for the 3 preceding calendar
years ending before date Form 8952 is filed
• Have consistently treated the workers as non-
employees
• Have no dispute with the IRS as to whether the
workers are non-employees or employees for
federal employment tax purposes
54. Eligibility Requirements
• Not be under examination by the
IRS
• Not be under examination by the
Department of Labor ( federal)
• Not be under examination by any
state agency for the proper
classification of the workers
• Not have been examined previously
by the IRS or DOL for the
classification of workers
56. RCH Credit
• This is an APA approved program for 1 (one) RCH
• You must attend the entire 1-hour course.
• You will be sent a certificate with the program
course code upon completion for your file folder
by no later than 9/21/12.
58. How Ascentis Can Help
• Tax Law Changes – Clients have access to changes
as soon as possible
• Updates – Processed behind the scenes in the
“cloud”
• Latest and Greatest – Clients always have the most
up to date version, with all tax, regulatory and
compliance updates applied. This is our guarantee.
59. Our next RCH webinars
• Check our website, Ascentis.com, under
“Resources” and 2012 Webinars for our most up to
date payroll webinars.
60. Stay Up To Date
• Sign up for our Ascentis, HR, Benefits and Payroll
Newsletter to be alerted via email about upcoming
webinars, as well as current trends and legislation.