remote

Misclassification of Independent Contractors is Risky Business

By Kristen Harris

More opportunities for independent and remote work also means more opportunities to run afoul of employment law. There are a growing number of people who are interested and open to flexible work options and, understandably, companies want to take advantage of their skills and talents.

Upfront disclaimer: I am not an attorney or legal professional. This is general information only; be sure to consult with your own legal, tax and employment experts. Okay, back to the topic…

Businesses are utilizing a wide range of arrangments, to get work done, including full time and part-time employees, freelancers, temporary staffing employees, contracting firms, remote workers, and more. With all of these different arrangements, it can be challenging to know how to engage each person in a legally compliant way.

Today there are still only two ways to classify any worker from a tax and employment law perspective: as an Independent Contractor (1099) or and Employee (W2). Misclassification can be a serious issue, whether purposeful or accidental, so it’s important to make the right choice.

The IRS, federal and state government agencies are well aware of the temptation to ‘misclassify’ a worker by treating them as an Independent Contractor instead of an Employee. It may seem simpler, easier and advantageous from a tax perspective, but federal and state entities are continuing to crack down on businesses that misclassify workers and the consequences can be serious.

So, how do you get it right? There are two key things to keep in mind.

First of all, regardless of what the worker may prefer, the onus and the risk to properly classify workers are on the business. With the potential new tax advantages, some individuals may request to be handled as an Independent Contractor, but it’s up to you to decide if they truly qualify.

Second, the default is for every worker to be an Employee. So, if you want to handle someone as an Independent Contractor, there must be significant evidence that the relationship qualifies.

However, there is no clear set of rules to determine whether someone is an Independent Contractor or Employee. There are common law rules provided by the IRS but ultimately you have to make a judgment call.

You’re looking for what degree of control and independence the worker has in their relationship with you in three categories: Behavioral, Financial, and Type of Relationship. How much do you control what, how and where they do their job? How are they paid and reimbursed for expenses? Are there contracts, benefits, and is the relationship ongoing?

If you really want the IRS’s help in making this determination, you can fill out Form SS-8. Or perhaps you could just work through the questions on the form and the answer will become clear.

Wondering what the risks are to misclassifying a worker? You may be held liable for employment tasks for the worker, plus fines and penalties related to failure to withhold and remit taxes, pay insurance or pay overtime. Workers who feel they have been misclassified may also file a Form SS-8 requesting a review of their work situation.

If you realize that some of your Independent Contractors need to be reclassified as Employees, the IRS does offer an optional Voluntary Classification Settlement Program to help you get on the right track. Or, many companies avoid the risk by working with a qualified firm to assess and take care of non-employees. It’s what we do every day–we’re happy to help!

 

  

Flexible vs Remote Work Part 3 (keys to making Remote Work work)

By Kristen Harris

In Flexible vs Remote Work Part 1 we talked about these two workforce trends and dug deeper into Remote Work in Part 2.

So, depending on what needs to be done, Remote Work can be a great option for both the company and worker. But we don’t see a lot of companies embracing this trend, or even considering it. They may think about it in a traditional sense, where they outsource a project to another business or freelancer, but there are other situations where it works just as well.

For example:

  • a retailer needs someone to manage their social media for 10-15 hours per week.
  • a non-profit organization needs someone fulltime to handle a variety of marketing work, including press releases, an e-newsletter, and an online events calendar.
  • a corporate internal communications department needs someone to edit and proofread all of their materials; workload varies so this can take anywhere from 25-40 hours per week.

In all of these situations, once the person gets to know the business and brand voice, their work can easily be done remotely. There may be the need for the occasional meeting or project review, but most of the work and communication will be online whether they’re sitting in the company’s office or not.

One problem we’re seeing right now is a mismatch between business needs and expectations for these type of projects. The company may be trying to hire someone on a part-time, flexible or on-call basis to do these types of work, while also requiring that all the work be done onsite in the company’s office.

We’re in a hiring market where talented people have lots of options, and most want to know approximately how many hours they’ll be working each week. Unfortunately, a candidate may accept this part-time type of scenario but will leave for a full-time role as soon as they can. These companies are looking for a unicorn, or maybe a four-leaf clover...what they want might exist but there are very few of them.

Often someone who is set up to do Remote Work would be a better fit for these type of needs, but businesses often don’t take advantage of this option. Why? I think it comes down to trust.

Companies and managers have concerns about Remote Work. The idea of working with people they don’t see every day makes them very uncomfortable. And their concerns are legitimate.

They have questions like...

  • how do I know when the person is working?

  • can I be sure they’ll get the project done on time?

  • will the work be high-quality, to my expectations?

  • won’t people feel disconnected from each other?

  • how will we communicate?

  • can they collaborate with other team members?

  • what about attending meetings?

  • how will they absorb our culture and what we’re all about?

First, it’s important to select someone who has the right skill set and self-management ability. Then, the rest of these concerns come down to the ability to build a high-level of trust and communication on both sides.

If you’re working with someone you trust and they trust you, then you know they’ll do what they say, hit their deadlines, do quality work, and let you know if they run into an issue. Aren’t these the same expectations you’d have of someone, whether they’re in your office or not?

One thing that can significantly help build that trust and keep projects on-track is an abundance of communication. Utilize all the tools at your disposal to find what works for the two of you: email, chat, phone calls, video calls, and in-person meetings if it’s feasible. Be sure to include conference calls with teams or collaborators; video calls can be great for this because everyone can see each other and body language so the conversation tends to flow more naturally.

Create a schedule for communication so expectations are clear on both sides. For example, you could email and chat anytime, have a phone call every afternoon, and a group video call weekly. Communicate as much as possible...if it’s feeling like a lot, maybe verging on too much, that’s probably just about right for a remote relationship.

There are a lot of benefits of tapping into Remote Work for your business. Explore the options and find ways to build the trust that makes it work.

Flexible vs Remote Work Part 2 (are you missing great talent?)

By Kristen Harris

In Flexible vs Remote Work Part 1 we talked about these two workforce trends, and how they are NOT the same thing. Flexibility is becoming more commonplace in business and can be a great retention tool.

But Remote Work is another trend that is getting a lot of attention lately. As a refresher, Remote Work is when the job doesn’t need to be done in the company’s offices. The person might work from home, a coffee shop, the library or a co-work space.

With our knowledge economy and business being more global, many jobs can be done remotely. Recently I saw an article about 170 companies that operate with remote workforces. Some companies are embracing it and others aren’t; success can be very dependent on the industry and role.

This week someone was telling me about her last corporate role–she worked for a global company and was the only person on her team in the local office. Her boss was in Europe, and most of her coworkers had no idea who she was or what she did. She often worked at home or from a coffee shop because it didn’t matter where in Columbus she was, she was always remote in relation to her team.

This Remote Work option can have advantages for both companies and workers. The company can access talent from other geographic locations because candidates don’t have to be in their metro area or willing to relocate. This also allows businesses to tap into talent with different skills or experiences, maybe ones that are not easily found in their own market. Having the option to work remotely may also help attract or retain a valued employee who needs flexibility in their schedule or is not able to commute.

For employees, there can be advantages to Remote Work as well. They can take a job or work with a company that is not in their area. If they have a high-level of expertise or a specialized skill set, the number and variety of companies they can work with greatly expands when working remotely. And the ability to work remotely also may make it possible to juggle work and family responsibilities or provide the ability to work for someone who has physical limitations.

In the creative industry, we’ve always had the concept of Remote Work with freelancers building their own book of work, managing several projects or clients, and doing all the work from their own home or studio. They’re not hermits...they often meet with the client or collaborate with other creatives through in-person or video meetings. But the majority of their actual work is done remotely.

However, even with all of these potential advantages, we don’t see a lot of companies taking advantage of, or even considering, this option. Why? We think it’s a matter of trust, and will dig into that more in Flexible vs Remote Work Part 3.  

Flexible vs Remote Work Part 1 (p.s. it’s not the same thing)

By Kristen Harris

Flexible Work and Remote Work are two key workforce trends that keep gaining steam. They’re often lumped together but, while they CAN be related, these two things are not the same.

Flexible Work simply means there is some measure of flexibility in the job. This may be how, when or where the work is done. Having a 10-hours/4 days-a-week schedule, working from 7-4 instead of 9-6, or working 30 hours a week at a prorated salary are all examples of flexibility. BYOD (Bring Your Own Device) and being given the choice of a laptop or desktop computer are also flexibility. And the option to occasionally go offsite to work from home or a coffee shop is flexibility as well.

But, this is where it gets tricky. Flexible Work (even with the option to go offsite) is not the same as Remote Work. When someone has a Remote Work job they are inherently not in the company’s offices. They may work in another city, like a sales manager with the Western territory for a New York-based company, or they may be located in a client’s office instead of the company headquarters. Their job may be one where it really doesn’t matter whether they’re in the office or not; many call centers are going to this model and setting their employees up to work from home.

The difference is, with Remote Work there is an expectation that you will be working from home or another location. The job may also be Flexible, but that’s not always the case. A job may be Flexible, Remote, or both.

For example:

  • a call center job done from home with a strict 12-8 schedule, five days per week is Remote Work but not Flexible Work because it’s a set schedule.
  • a marketing job that only requires 25 hours per week, onsite in the company’s headquarters, is Flexible Work but not Remote Work because the person is required to be in the office.

  • a sales role that has no set schedule, working wherever and whenever is needed from home, a coffee shop or the airport, is both Flexible and Remote Work.

Companies are becoming more open to Flexible Work options, offering different schedules and occasional “work from home” days. Or they might realize their need is not a full-time role, and perhaps better suited to a part-time employee or contractor. Businesses that can offer this type of flexibility are able to tap into a broader pool of candidates and retain valuable team members as life needs change.

There are different considerations with Remote Work, we’ll explore that in Flexible vs Remote Work Part 2.