The ABA Journal published an article this month by Susan A. Berson concerning increased scrutiny by the IRS and DOL regarding classification of workers as independent contractors.
I strongly agree with the recommendations in the article regarding business auditing use of independent contractors:
We recommend businesses conduct a comprehensive audit of the written independent contractor agreements in place,” Idalski says. “Provisions covering the day-to-day operations, who does what, who’s in charge, equipment, policies and procedures should be included.
To that suggestion I would add that Washington employers must also look to the different tests under state law for whether someone is an independent contractor as well as what obligations the business has to toward an independent contractor.
For example, the Washington legislature defined a “worker” for purposes of industrial insurance to include independent contractors when the essence of the contract is for personal labor. As a result, under some circumstances, Washington businesses are required to make industrial insurance contributions on behalf of workers even though they are independent contractors.
This is a complex area of the law, but the consequences of misclassifying employees as independent contractors or failing to make required contributions for covered workers can be extremely costly.