Independent contractor misclassification

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Following on the heels of aggressive new measures announced by the U.S. Department of Labor and IRS in the past month and the recent enactment of a new California law to crack down on willful misclassification of employees as independent contractors, Rep. Lynn Woolsey (D. Calif.) reintroduced, as H.R. 3178…

California joins a growing list of states that have enacted independent contractor misclassification legislation in the past four years.  This new law, signed by Governor Jerry Brown on October 9, 2011, adds harsh financial penalties for companies and persons who engage in “willful misclassification” of employees as independent contractors,…

The U.S. Department of Labor recently scored a meaningful victory in yet another court case where a company failed to structure, document, and execute properly an independent contractor relationship with workers who were paid on a 1099 basis.  In Hilda L. Solis, Secretary of Labor v. Cascom, Inc. and Julia…

On September 19, 2011, Secretary of Labor Hilda Solis and IRS Commissioner Doug Shulman signed a Memorandum of Understanding to coordinate both agencies’ law enforcement efforts aimed at businesses that misclassify employees as independent contractors.  At a ceremony held at the Labor Department headquarters in Washington, Secretary Solis said, “We’re…

The IRS yesterday announced a new program to permit taxpayers to voluntarily reclassify independent contractors as employees for federal employment tax purposes.

The program, called the “Voluntary Classification Settlement Program” (VCSP), would allow businesses to voluntarily reclassify workers who currently receive 1099s from the company by making what is referred…

On Friday, April 8, 2011, Senators Sherrod Brown (D-Ohio), Tom Harkin (D-Iowa), and Richard Blumenthal (D-Conn.) introduced the Payroll Fraud Prevention Act (S. 770), a trimmed-down version of the Employee Misclassification Prevention Act bill that was introduced into both houses of Congress a year ago. Taking a cue…

Listening to President Obama address issues of national importance during his 2011 State of the Union address last night, anyone familiar with independent contractor compliance and 1099 issues could not help but notice two meaningful references to these two related matters, both of which gained widespread attention in 2010.

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