By Kelly A. Briganti, Editorial Director, G2 Intelligence
For flexible staffing, it may be appealing to hire independent contractors. But make sure your arrangement is truly an independent contractor arrangement and not employment. Just the label you give it isn’t the determining factor. Mischaracterizing someone as an independent contractor when they should really be an employee can bring unwanted attention to your laboratory or pathology practice from the Internal Revenue Service (IRS) and the Department of Labor (DOL) and it’s relevant to compliance with the Affordable Care Act’s employee health insurance benefit obligations.
While this is not a new issue, it has been receiving a lot of attention recently. This summer, for example, the DOL spotlighted worker classification, noting that its Wage and Hour Division has received “numerous complaints” from workers alleging misclassification as independent contractors. The DOL issued an Administrator’s Interpretation addressing the Fair Labor Standards Act’s terms for classifying workers as employees. It also said that in response to this “problematic trend,” many states have established task forces focused on misclassification of workers. The DOL has been entering into memoranda of understanding with the IRS and individual states to coordinate their efforts on this issue. Just last month, Vermont entered into such a memorandum.
The DOL further indicated that, in 2014, its Wage and Hour Division recovered a total of $79 million in back wages for more than 109,000 workers. So it’s unwise for any employer, in any industry, to ignore the classification issue. If you are wrong in classifying workers as employees or independent contractors, you risk liability for unpaid wages, unpaid income and unemployment tax withholdings, unpaid workers’ compensation premiums and other benefits, and potential liability for failure to provide health insurance benefits under the ACA.
For more information on this and other compliance issues affecting your laboratory or pathology practice, see G2 Compliance Advisor.