Employers need to look at how they currently deal with independent contractors and implement processes for ensuring compliance with all regulations.
Mountain View, Calif. (PRWEB) October 20, 2009
New IRS programs and increasing scrutiny by states will catch more employers in the misclassification of temporary and contract workers, according to The Albany Group, a global contingent workforce management firm.
The IRS has announced it will begin an intensified audit program in February 2010 that will review 6,000 randomly selected companies for underpayment of employment taxes.
In addition, states such as Massachusetts, New Hampshire and Maryland have recently ruled in favor of stringent legal standards for independent contractor classification, and increased penalties. Other states are expected to similarly clamp down on worker misclassification.
"Over 70 percent of all audits result in finding misclassified workers, and the IRS and EDD prevail in over 90 percent of cases that go to hearing or trial," said Jason Posel, senior vice president. "Employers need to look at how they currently deal with independent contractors and implement processes for ensuring compliance with all regulations."
With audits going back three years, most companies have a hard time proving past compliance when they don't have a reliable process in place, according to Posel.
Penalties are onerous and so are the subsequent claims of non-payment for overtime and benefits. Northwestern Mutual was recently hit with a $200 million lawsuit by employees claiming to have been misclassified as 1099's, joining the likes of Microsoft, HP and Time Warner that have faced various judgments in the tens of millions of dollars. Fed-Ex, who were issued a multi million dollar fine by the IRS, continue to face multi-state class action law suits by former misclassified contractors.
ICQ 2.0, Albany's Web-based Independent Contractor evaluation program, combines IRS and state law to produce a clear, consistent, and documented process for 1099 compliance. A simple online questionnaire for hiring managers and prospective contractors enables Albany to advise employers so they don't unintentionally violate federal and state-specific 1099 regulations.
Albany also offers co-branded and private labeled compliance "microsites" that are easily integrated into an organization's existing process, educating all stakeholders on compliance risk. A demo of the program can be viewed at http://www.thealbanygroup.com/icq.
Albany's innovation and professionalism over the last 20 years has helped it grow into the market leader for contingent workforce management solutions. With offices on six continents serving clients in more than 70 countries, Albany offers a variety of national and international workforce solutions, including contractor payroll, Independent Contractor compliance, Managed Service Provider programs, Recruitment Process Management and Consulting.
Senior Vice President
Jason.Posel (at) thealbanygroup (dot) com
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