Total Articles: 6
IRS Launches New Voluntary Classification Settlement Program
The Internal Revenue Service (the “IRS”) recently announced the Voluntary Classification Settlement Program (“VCSP”), a new program available to businesses, tax-exempt organizations, and government entities that are erroneously treating workers as non-employees or independent contractors. The program provides employers the opportunity to voluntarily reclassify workers as employees with limited federal employment tax liability for past
non-employee treatment.
DOL Coordinates With IRS, States On Independent Contractor Misclassification
Earlier this week, the U.S. Department of Labor held a ceremony at which Secretary of Labor Hilda Solis signed a memorandum of understanding with the Internal Revenue Service to "improve departmental efforts to end the business practice of misclassifying employees in order to avoid providing employment protections." The DOL also signed or has agreed to sign memorandums of understanding with officials in 11 states to coordinate efforts to crack down on independent contractor misclassification, including Connecticut, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, Missouri, Montana, New York, Utah, and Washington.
Independent Contractors Are Again Front-And-Center
The U.S. Labor Department announced today that it has entered into a cooperative alliance with the U.S. Internal Revenue Service and others aimed at ending "the business practice of misclassifying employees [as independent contractors] in order to avoid providing employment protections." As the IRS's involvement might suggest, this collaboration has as much to do with enhancing the inflow of tax revenues and other sums to various governments as it does with "employee protections".
Once more into the breach (of contract), dear friends
It is a well-settled principle of contract law that if a party breaches a contract, it may later have trouble enforcing the provisions of that contract in court. Applying that principle, a recent opinion issued by the Third U.S. Circuit Court of Appeals (which includes Delaware) indicates that an employer's misclassification of an employee as an independent contractor may result in a breach of contract, which can later prevent enforcement of the contract's noncompetition provisions.
Worker (Mis)classification Can Lead To Trouble.
Over the past year, federal and state governmental agencies have signaled their intent to more seriously investigate the misclassification of employees as independent contractors. For various reasons, employers often find it desirable to classify certain workers as independent contractors, but state and federal agencies often look at classification decisions very closely.
WORKER CLASSIFICATION: WILL THE IRS AND OTHERS AGREE WITH YOU? (pdf).
Employers often face a business decision about how to treat a particular worker or group
of workers: Are the individuals independent contractors or employees? Often, the independent
contractor classification is attractive to employers because it affords certain flexibility. However,
there are a number of factors that must be considered when deciding how to classify workers.
