Mitigating Contract Employee Risk in U.S.
The importance of correctly classifying employees in the United States is at an all time high, especially in light of the changing government regulations regarding the Patient Protection and Affordable Care Act (PPACA) and the Internal Revenue Service’s (IRS) recent claim to be more vigilant against companies that don’t meet contract employee classification requirements.
Misclassifying W-2 employees as 1099 independent contractors may result in unwanted IRS audits that can leave employers responsible for the tax liabilities and penalties. It also can leave employers responsible for paying back taxes and penalties associated with the PPACA if they are found to have misclassified employees.
Companies that are unsure whether they are misclassifying employees and at risk of an IRS audit should determine and understand the differences between an employee and an independent contractor by examining the relationship between the worker and the business. Generally, an individual can be classified as an independent contractor if the employer has the right to control or direct only the result of the work and not what will be done and how it will be done.
To avoid misclassifying employees, companies can enlist the resources of a staffing firm to ease uncertainty regarding contract employees. Faststream helps address these concerns by assuming the compliance risk associated with temporary, temp-to-hire and interim employees. By directly employing contract workers, Faststream eases uncertainty around classification status and assumes all risk for tax liability, insurance (health and liability) and benefits.
In addition to compliance risk, there is also a liability and insurance coverage risk for employers; with contractors, workman’s compensation and liability insurance policies often prohibit companies from including their contractors in existing policies.
Choosing a contractor employed by Faststream gives companies the ability to hire contractors without worry. Faststream’s insurance policies cover every possible scenario and are backed by the world’s best insurance providers. Companies also don’t have to worry about the classification risk of contract employees, especially as the PPACA health laws are now being more strictly enforced.
On the other hand, Faststream also saves money for contract employees who under most circumstances must provide their own insurance; given the dangerous work performed offshore and in the field, it’s often 1) hard to secure coverage at all, 2) often not the correct or sufficient coverage, or 3) not provided by a reputable insurance company.
Whether you are an employer looking to fill temporary positions with contract employees or a contractor seeking employment, Faststream can mitigate your risk. For more information contact Eric Peters at Eric.Peters@faststream.com.