Garage door industry magazine for garage door dealers, garage door manufacturers, garage door distributors, garage door installers, loading docks, garage door operators and openers, gates, and tools for the door industry.
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10 International Door & Operator Industry™ Continued on page 11 I f your company has more than one Independent Contractor, commonly known as a "1099," I urge you to read this article. Misclassifcation is a major issue facing employers and has recently gained a lot of attention by the United States Department of Labor (DOL), the Internal Revenue Service (IRS), and various other state and federal agencies. Both the IRS and DOL have stated publicly that they plan to audit employers with a history of incorrect employee classifcation and force violators to pay harsh fnes. This situation may get worse if Congress passes the Payroll Fraud Prevention Act, a bill that would make misclassifcation a cause of action under the Fair Labor Standards Act. Because the construction industry- door dealers included- has a history of incorrect employee classifcation, it will remain a target of investigations for the foreseeable future. The problem with preventing misclassifcation is that there is not a specifc test to determine a worker's true employment status. Instead, case law has established a set of factors that will be applied to employees challenging their status as an independent contractor. Employers should apply these factors to every independent contractor on your payroll and any new hires to ensure compliance. Because the courts evaluate classifcation status on a case-by-case basis by looking at the daily operations and the relationship between the employer and the worker, it is imperative that you do the same. LEGAL&LEGISLATION; In summary, remember three key factors: behavioral control, fnancial control, and the relationship between the parties. If the worker has control of his or her work, including deadlines and the means for completing the work, he or she has the characteristics of an independent contractor. If the worker is paid by the project or at a set monthly rate and covers his or her own business and travel expenses, including the purchase of tools and equipment for the job, he or she is likely an independent contractor. If there is a contractual relationship in place such that neither the employer or the worker can terminate the relationship, then that worker is likely an independent contractor. Based on the amount of control an employer must forfeit to have a true independent contractor, it is unlikely that all of your independent contractors are properly classifed. Take the time now to appropriately classify your employees and, if necessary, alter your hiring practices to apply the factors above to any potential independent contractors. By Ashley L. Felton Safran Law Offces Ashley L. Felton is an attorney at Safran Law Offces in Raleigh, NC. Her practice is focused on labor and employment defense and compli- ance for the Construction Industry. If you have any questions or concerns, feel free to email Ashley at afelton@safranlaw.com. For more information about Labor and Employment issues concerning the Construction Industry, go to www.safranlaw.com/safranlawblog. Employment Concerns: The Independent Contractor & Misclassifcation 10 International Door & Operator Industry™ 1/28/14 3:40 PM