COMPLIANCE

Appropriate Worker Classification: big Challenge For Organizations

Fueled by sharpened scrutiny by tax authorities and an avalanche of regulatory developments, independent or 1099 work arrangements have been villainized in the press as tax loopholes and unfair attempts by corporations to circumvent employer’s obligations and save money.

Not knowing what they don’t know and fearful of being out of compliance, many companies and organizations all too often avoid contractor or freelance-based work relations. Instead, these companies resort to employment-based (third party) solutions, incurring unnecessary expenses.

As HR experts know, worker classification is not a binary science. There rarely is a straight ‘yes’ or ‘no’ answer to the ‘compliant or not’ question. More often, there is a full spectrum of outcomes that depend on how certain aspects of the law are interpreted or adapted. Therefore, a classification process is best handled by an impartial, contingent workforce specialist who does not benefit from the outcome.

At BOTH, we monitor compliance for our clients or independent professionals. We also refer worker classification requests from companies to our channel partner, Headway Workforce Solutions, that specializes in worker classification and compliance.

A reality is that not every position qualifies to be filled by a contractor. In addition, the BOTH Company of One concept does not represent a solution by default. That said, the BOTH approach does fortify and reinforce compliance in the strongest possible way, in particular in those cases where positions qualify only conditionally.