labor lawAdivision of labor law center

The IRS  and U.S. Department of Labor are cracking down on employers who try to avoid employment taxes by misclassifying employees as independent contractors.

Under IRS regulations, an independent contractor is a self-employed small business person. The employer does not have to pay FICA or unemployment taxes on independent contractors, under federal law. State laws requiring workers’ comp insurance do not apply to independent contractors. Employers are also not required to withhold federal income taxes for independent contractors.

The minimum wage and overtime provisions of the FLSA, the federal Fair Labor Standards Act, do not apply to independent contractors.

All of these factors make hiring independent contractors very attractive to employers. However, both the IRS and the U.S. Department of Labor have stepped up enforcement actions against employers who misrepresent workers as independent contractors, when in fact they are employees.

To further complicate the issue, there is no one standard or group of standards to determine if a worker is an independent contractor, rather than an employee. The IRS has traditionally used the 20-factor test, particularly to determine if workers’ compensation coverage is required.

The IRS 20-factor test basically determines how much control the employer exercises over the worker. In general, a high level of control results in employee status, rather than independent contractor status. When an employer controls when, where or how the work is performed, that usually constitutes employee status.

Other agencies use (more…)

Earlier this summer, Tennessee Governor Phil Bredesen signed a new Tennessee Workers’ Compensation law. The new law will limit employers’ liability for injuries suffered by employees during voluntary recreational, social or athletic activities. 

While this law limits workers’ comp cases in Tennessee, employers in other states should be cautious about permitting recreational or sports activities on company property.

The law highlights a dilemma for many employers – how to promote a healthy lifestyle without incurring additional liability for sports-related injuries and deaths.

The new law was sparked by the lawsuit Gooden V. Coors Technical Ceramic Co. In that case, Mr. Gooden collapsed with a fatal heart attack while playing basketball on the employer’s premises during an unpaid break. The court found that an employee’s death on the employer’s premises was a workers’ comp case – even though the basketball game was entirely voluntary.

Because the employer provided the basketball hoop, supervisors sometimes participated in games and the games occurred on company property, the court found that the death (more…)

Washington employers have long complained about the high cost of doing business in the state, including workers’ compensation claims and insurance premiums. Now, they can take control of this annoying problem.

Employers in the state of Washington can sign up for free seminars on managing workers’ comp costs, claims and premiums sponsored by the state government.

The Washington State Department of Labor and Industries or L&I is offering the free seminar, entitled “Introduction to Rates and Claims Management.”

The seminar is free, but registration is required. Participants can register online  or by calling 1-800-574-2829.

The half-day seminar will be presented on 17 different dates in locations across the state including Bremerton, Tukwila, Vancouver, Port Angeles, Kennewick and Mount Vernon.

The complete schedule of dates and locations is here.  The next workshop is in Kennewick on June 10, 2009. The final workshop this year is in Tacoma on December 9, 2009.

According to L&I, the workshop is an overview of basic workers’ comp claims management principles. Participants will learn:  (more…)

There is an old saying that anyone who represents himself in court has a fool for a client.

The state of Arizona appears to be trying to change that perception. The state recently published five guides for employers – and others – who would prefer to represent themselves in workers comp hearings, appeals cases and the like.

Each separate guide focuses (more…)