Pit & Quarry, September 2016

The emPloYeRs PeRsPecTIve The IRS recently expanded its Voluntary Classification Settlement Program VCSP paving the way for more businesses to take advantage of this low cost option for achieving certainty by reclassifying their workers as employees for future tax periods VCSP also provides partial relief from federal payroll taxes for eligible employers who are currently treating some or all of their workers as independent contractors and now want to treat them as employees Under the revamped program employers other than those undergoing an employment tax audit can qualify for VCSP To be eligible for the VCSP an employer must be treating workers as nonemployees and file any required Form 1099s Whats more employers cannot qualify if they are under audit by the DOL or state agency concerning the classification of these workers PITfAll Recently the Los Angeles office of the National Labor Relations Board issued a complaint based on an unfair labor practices charge brought by the International Brotherhood of Teamsters against Intermodal Bridge Transport a California company in the logistics and transport business The complaint alleges among other things that the employers classification of its delivery drivers as independent contractors constitutes an unfair labor practice The argument is based on the claim that misclassification inhibits individuals who would otherwise be employees from engaging in their Section 7 rights to concerted activity including unionizing For businesses that utilize the services of independent contractors this action presents one more potential front on which the misclassification war may be waged This is in addition to state and federal agencies which There is no magic or set number of factors that makes a worker an independent contractor or someone an employee The key is to look at the entire relationship include the United States Department of Labor the Internal Revenue Service state departments of labor and state unemployment offices Obviously every aggregate producer should be wary of classifying workers as independent contractors The tests are difficult to meet and the penalties are severe According to U S Secretary of Labor Thomas Perez worker misclassification is a national problem that has three sets of victims the worker himself or herself the employers who play by the rules they cant compete for contracts they cant compete for business because they pay their taxes and then the tax collector because when a business is cheating and not paying their workers comp taxes unemployment taxes go up because the pool has grown smaller An independent contractor Does not have the same legal rights and protections as employees Is paid only for work performed Clients and customers are not required to pay employee benefits under FLSA including overtime and minimum wage Is not covered under the client or customers workers compensation benefits Is not entitled to employee benefits Are not covered under the Equal Employment Opportunity laws Taxes are not withheld and paid by the client or customer including income FICA and unemployment The crushed stone and sand and gravel operation that misclassifies a worker as an independent contractor may be required to pay back taxes as well as provide employee benefits workers compensation unemployment and more And just as businesses should be very careful to distinguish between employees and independent contractors so should every worker Are your workers clearly independent contractors P Q Mark E Battersby is a freelance writer who has specialized in taxes and finance for the last 25 years Booth 1438 pitandquarry com September 2016 PIT QUARRY 97