There Is No Such Thing as a Valid Independent Contractor
Welcome back to the blog series on the 13 Myths of Independent Contractors. We created this series to help you navigate some of the potential legal minefields caused by the complex legal environment surrounding independent contractors. The content from this series comes from the whitepaper: Independent Contractor Myths versus Reality.
Myth: Government agencies hold everyone to be an employee because they want to capture the tax revenue and guarantee worker protections, therefore there is no such thing as a valid independent contractor.
This is a myth where the truth is somewhere in the middle.
Both federal and state agencies have stated that using independent contractors is a proper and legitimate business strategy. Court cases and audit findings confirm that position every day. However, there is a strong agency bias that all workers are employees of the entity receiving the benefit of their work product, unless proven otherwise.
The only fail-safe way an organization can mitigate worker misclassification risk is if they never engage a service provider as an independent contractor. This strategy is always an option but it can be severely limiting for organizations who want flexibility and the best access to talent.
The truth is that organizations can safely use consultants as independent contractors, so long as they classify them correctly and have the proof to support their decision. All of the factors must be considered and documented for each independent contractor classification.
In the unfortunate (but increasingly common) event where a company is audited, the best protection is a properly documented decision that will help prove to the agency that the rules were followed. It is dangerous to guess incorrectly, just as it is dangerous to ignore the issue. The prudent business decision is always to mitigate risks.
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