FREQUENTLY ASKED QUESTIONS
Q: WHAT is a Contingent Workforce “CW”?
A: A CW is a provisional group of workers who work for an organization on a non-permanent basis, also known as 1099’s, freelancers, temporaries, contract workers, independent contractors or consultants.
Q: WHO hires Contingent Workers?
A: All types of employers regardless of size, industry, public or private, location, or season.
Q: WHEN are Contingent Workers hired?
A: Contingent workers are hired when companies desire flexibility in the face of seasonal and cyclical forces, interim assignments, such as vacation or disability relief, job vacancies and projects requiring specialized skills.
Q: WHY would someone choose to be a Contingent Worker?
A: Being a contingent worker allows freedom and flexibility for one’s work schedule, fosters “try before you buy”, gets one’s foot in the door and, builds career equity.
Q: HOW many Contingent Workers are there in the US?
A: Currently about 20-30% of the workforce in Fortune 100 companies is made up of contingent workers; that percentage is expected to swell to roughly 40% by 2020.
Q: WHAT is employee misclassification?
A: Employee misclassification is the practice of labeling employees as something other than employees, such as independent contractors, aka 1099’s.
Q: WHY does employee misclassification occur?
A: It occurs because there are very specific yet complex governmental regulations that impact your hiring of workers. An innocent or inadvertent classification of a worker as an independent contractor may be deemed to be unlawful according to these regulations. Consequently, this misclassification can subject your company to substantial fines and all other types of penalties.
Q: WHAT government agencies are involved with employee misclassification?
A: Local, State and Federal Treasuries, Internal Revenue Service, Social Security, Medicare, Unemployment Insurance, Workers’ Compensation, and the Department of Labor.
Q: WHO is affected by employee misclassification?
A: Employees, Employers and the Economy.
Q: WHAT are some professions recently affected by employee misclassification?
A: To name a few, IT, domestic cleaners, truck drivers, couriers, construction workers, exotic dancers, newspaper carriers, cable technicians, event planners, contractors and computer programmers.
Q: WHAT are the consequences of employee misclassification?
A: Business owners may be liable for back pay, back taxes, back benefits, interest, penalties, and fees as high as 80% of the original contractor spend. This liability is born of the desire of state, local and federal governments to collect additional revenue.
Q: HOW does a company correct any classification errors?
A: If a company realizes they have been misclassifying employees, there is no need to panic. However, corrections should be made as soon as possible. The best thing to do is to identify the errors and then make the changes going forward. Be proactive and don’t wait until you get audited by the IRS or DOL. If necessary, get help. Consult a qualified HR consultant such as TMK Advisory, who has vast experience in this area.