ILLEGAL IMMIGRANTS & SUBCONTRACTING = PROBLEMS
The fallout from strongly increased attention to immigration issues at all levels is damaging small businesses like ours -- and is only going to get worse! It turns out that the independent contractor tool is being seriously abused by employers to evade the issues involved with illegal immigrants.
As the IRS and Wage & Hour police crack down -- who do you think they will come after? It's the little guys who are easy targets!
It is illegal to knowingly classify an employee as an independent contractor in order to avoid "Affirmative Action" recruitment efforts, immigration restrictions, and/or payment of statutory taxes, fees, insurance premiums, fringe benefits, or any other applicable or statutory employment regulation.
Investigation is revealing that the key tool used by employers to bypass immigration restrictions is subcontracting. Employers of low-income workers frequently mis classify their employees as "independent contractors" (either by giving them an IRS Form 1099 instead of a W-2, or by paying them in cash and not withholding any taxes).
And who can blame them? The result is that the worker gets no coverage of most labor and employment laws. This decreases employers' payroll costs by 15 to 30%. It also lets employers off the hook for rules protecting "employees," including the responsibility to provide workers' compensation and other benefits and to bargain with unions.
Independent contractor misclassification has been common in some sectors historically, including in agriculture and day labor jobs.
Its use today is on the rise, however, and can now be seen in nearly every sector of today's economy, in particular in the low-wage immigrant dominated sectors of home health care, construction, delivery services, as well as cleaning and janitorial services.
THE BASICS OF BEING OR HIRING
The ability to hire independent contractors, can provide carpet cleaning or restoration service owners access to talent and skill capabilities they'd otherwise have to fore go. Full time, year around employees, after all, are expensive!
And if you're an independent contractor, you get to set your own hours, pay rate and -- as your reputation grows -- projects.
But whether you're a subcontractor, or are hiring them, you need to deal with legal and tax issues that are easily addressed, yet most often neglected.
Following are excerpts from a BizBriefs article that can help you keep everything on the up and up!
PLAY IT SAFE: PUT YOUR INDEPENDENT CONTRACTOR AGREEMENTS INTO WRITING.
For most types of projects that you might hire an independent contractor to do, the law does not require you to put anything in writing. You can talk to the independent contractor, agree on the terms of your arrangement, and have an oral contract that any court will enforce.
As your mother no doubt told you, however, just because you can do something doesn't mean you should.
THE IMPORTANCE OF A WRITTEN AGREEMENT
Oral agreements invite costly misunderstandings because there is no clear written statement of what the independent contractor is to do, how much you are to pay, or what the two of you will do if a dispute arises. These misunderstandings might be innocent or they may be purposeful.
Either way, it'll be your word against the worker's, and there is no telling whom a judge or jury will believe. It's much safer to rely on a written document that clearly sets out the details of your relationship.
WRITTEN INDEPENDENT CONTRACTOR AGREEMENTS PROVIDE YOU WITH LEGAL PROTECTION.
Read the rest of this article (and save yourself time, money and heartache!)
I strongly recommend you invest in one of these information resources . . .
Working With Independent Contractors
by Attorney Stephen Fishman
Pub. Date: Jul 2005
Pages: 288 pp
Forms: 38 forms
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