New Hire Reporting May Be Required for Your Independent Contractors

Most employers are aware of the federal law requiring you to report all of your newly hired employees (and rehired employees) to your state within a specified time period, but were you aware that you may also be required to report new independent contractors that begin working for you to your state as well?

New hire reporting is mandated at the federal level by The Personal Responsibility apaperclip-178126_1920nd Work Opportunity Reconciliation Act of 1996 (PRWORA), but specific details as to the requirements of the new hire reporting vary from state to state.  States determine how the new hire reporting information should be submitted, in what format, in what amount of time (maximum of 20 days from date of hire per federal law), and who should be reported. The “who” includes independent contractors for many states such as California. Continue reading

California Bill Would Significantly Change the Definition of an Employee

California businesses who rely on “gig workers” to perform the work for the company may soon need to restructure their business model based on a new bill that has been passed by Congress in California and is expected to be signed soon by Governor Gavin Newsom. This new bill would require that companies using these “gig workers” (the two biggest companies being Uber and Lyft) reclassify their workers to be considered employees rather than continue to be classified as independent contractors.  

It’s important to note that this would only apply to California workers. The National Labor Relations Board (NLRB) ruled earlier this year that Uber drivers (and similar workers) were independent contractors because they used their own equipment, set their own schedules, could work for competitors, and were responsible for their own profit and/or loss. Continue reading

Employee or Independent Contractor? Eleven Tests for Correct Classification


UPDATE: The Department of Labor has released a memo providing employer guidance for determining whether a worker should be classified as an employee or independent contractor.  Click here for our more recent post.

Should your new worker be classified as an independent contractor or employee?  Review these eleven tests, divided into three main categories, to ensure you are classifying correctly.

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Employee or Independent Contractor? Two Tax Court Cases


Does your firm use outside workers for some jobs?  This can result in significant tax breaks if the workers are properly classified as independent contractors rather than employees.

Key point: If a worker is an employee, your company must withhold federal income tax and employment taxes from his or her wages.  In addition, your business is responsible for paying the employer’s share of federal payroll taxes.  Conversely, if a worker is characterized as an independent contractor, your company isn’t liable for these payroll tax obligations.

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