Your business is growing fast. As you expand your team, you may want to bring on additional help. Sometimes a contractor is a good fit, but be careful because your contractor may actually be an employee.
Before you make this important staffing decision, you need to fully understand both types of workers and the importance of classifying them correctly.
The US government is aggressively cracking down on misclassifying workers. Recently, the Department of Labor awarded $10.2 million to 19 states to implement or improve worker misclassification detection and enforcement initiatives in unemployment insurance programs. In a 2009 study, the Government Accountability Office (GAO) estimated that the federal government lost $2.72 billion in 2006 revenue from the misclassification of independent contractors. This is impacting businesses around the country.
Check out this guide to make sure your worker is properly classified:
Want to embed this infographic on your website? Copy and paste the code below:
<img src="https://3lqi6b1pae9649p36w2assxp-wpengine.netdna-ssl.com/wp-content/uploads/2014/11/employee-vs-contractor.jpg"> <p>Employee vs. Contractor: Is My Worker an Employee or Contractor? - An infographic by the team at <a href="https://gusto.com">Gusto</a></p>
If you are still unclear, complete IRS Form SS-8 and they’ll give you a final determination of the worker’s status. It could take 6 months for a decision, but it will give you peace of mind to continue running your business.