Should you hire independent contractors for your San Diego business to avoid unemployment and workers compensation expenses, as well as FICA and other payroll taxes? The past few years have brought substantial changes in employment laws at the federal, state and local level and one of the major areas of focus at both federal labor agencies and the IRS, as well as the State of California involves independent contractors.
The rules have substantially changed, and the misclassification of employees as independent contractors in California can result in $25,000 civil penalties per incidence and crippling reimbursement of all associated unemployment, workers compensation, and payroll related taxes. If you hire independent contractors for your San Diego business you substantially increase the risk of an EDD or IRS audit.
Once the audit is completed and a government agency has found you have misclassified 1099 workers, the next hand reaching into your pocket is the independent contractor themself, who now files a lawsuit against your company for back pay, benefits and unpaid overtime. California Courts tend to side with employees against employers as it generates income for the local economy and tax benefit for the State of California.
The employer defense attorneys at the Watkins Firm protect our clients, and help them to remain in full compliance will all federal, state and local employment laws. We keep them abreast of changes that are required in payroll strategy, as well as strategies to update employment contracts, employee handbooks, policies and procedures and management guidelines to reduce or eliminate exposure to employee-related lawsuits.
If you are still wondering if you should hire independent contractors for your San Diego business it is important for you to understand what has changed and how to protect yourself and your business. A recent US Supreme Court Case changed the basis for evaluating an employee versus an independent contractor, and the IRS, Department of Labor and California’s Labor agencies are having a field day pursuing employers for misclassification. The US Department of Labor recently hired hundreds of auditors for the sole purpose of reviewing companies who employ independent contractors.
What changed? How does the economic relationship between you and your independent contractor matter more than the control you exert over the work performed and materials, tools and technology employed? We invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.
