Your Employees Are Not Independent Contractors
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U.S. and local governments crack down on employers who pay workers as contractors
Since many small pressure wash companies pay their employees in cash and call them “independent contractors“, we reposted this article – published a few months ago in the Washington Post – to enlighten them on the risks they’re taking. We even heard of one little guy living on the ragged edge that withholds taxes from his employees, then gives them a 1099 at the end of the year.
By Vickie Elmer, Published: October 9, 2011 in the Washington Post
If your independent contractors clock in and follow your instructions for completing their tasks, maybe you’re requiring too much of them. Maybe they should be considered employees and not independent contractors, government labor experts say.
The federal government as well as states, including Maryland, are cracking down on employers who treat what should be workers as contractors. Governments are losing millions of dollars in payroll tax and other revenue and workers are losing benefits, including Social Security, health care and unemployment insurance.
Getting the classification right is important, labor experts say, because if found guilty of misclassifying workers a business can be fined thousands of dollars and required to pay thousands more in back wages to the worker.
An employer who misclassifies workers as contractors “has a competitive edge,” said Richard A. Sebeck, program manager for the Maryland Department of Labor, Licensing and Regulation’s Division of Labor and Industry. “It’s bad for all honest businessmen.”
Moreover, employees misclassified as contractors, Sebeck added, who “get hurt on the job can’t get workers compensation. If they’re laid off, they may not be entitled to unemployment” benefits.
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