Surviving the Misclassification Crackdown

Classification of workers as employees or independent contractors is a murky area, but there are some safe harbors and some steps every employer should consider, says Brinkerhoff.

Both attorneys are with the law firm of Holland and Hart, Brinkerhoff in the Las Vegas office and Lane in the Reno, Nevada office. Their remarks came during a presentation at the Advanced Employment Issues Symposium held recently in Las Vegas.

Safe Harbor Rules

Fortunately, says Lane, there are a few safe harbor rules that will help you show that you had a reasonable basis for your classification decision:

• There is a court case or IRS ruling in your favor
• There was an IRS audit and no requirement of reclassification
• A significant segment of your industry treated workers this way
• You relied on the advice from an attorney or accountant
• A Form SS-8 was filed by an employee or by the employer to obtain a definitive answer.

What Does All This Mean?

Unfortunately, says Lane, it means that on the federal level, different tests and various factors create uncertainty, and there’s no “bright line” answer. Often it boils down to this: Does the individual work in the “core area of the business’s marketplace offering? Or does the individual work in a unique area or specialty, such as software development, that would enhance the service, but is not really the company’s business?

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Recommendations

Lane recommends that employers:

• Review and update independent contactor agreements and follow them.
• Make sure independent contractor agreements show the following elements:
• Lack of control
• Project basis
• Intent of both parties
• Worker’s equipment
• Worker’s ability to work for other companies
• Worker may assign tasks
• Worker provides liability insurance and benefits
• Ineligibility for employer benefits
• Own business and tax ID number
• Opportunity for bonus or charge back
• Draft a new agreement for each project

What Else You Can Do

• Know the law in your state for
• General employment relationships
• Unemployment insurance
• Workers’ compensation
• Schedule a classification audit with labor and employment counsel
• Audit companies or agencies providing you with contract workers, and determine joint employment status
• Remember:
• The existence of a contract is not dispositive is the workers is truly an employee
• Workers cannot waive their rights under wage and hour law.

And we’ll add one more thing for your to-do list—write and/or update those job descriptions. Like many things in HR, classification begins with the job description. How about your job descriptions? Are they well-written, up-to-date, and ADA-compliant? Detailed enough to help? Essential skills delineated?

If not—or if you’ve never even written job descriptions—you’re not alone. Thousands of companies fall short in this area.

It’s easy to understand why. Job descriptions are not simple to do—what with updating and management and legal review, especially given the ADA requirement of a split-off of essential functions from other functions in the description. Wouldn’t it be great if your job descriptions were available and already written?

Actually, they are. We have more than 700, ready to go, covering every common position in any organization, from receptionist right up to president. They are in an extremely popular BLR program called the Job Descriptions Encyclopedia.

First created in the 1980s, the “JDE” has been continually refined and updated over time, with descriptions revised or added each time the law, technology—or the way we do business—changes.

700+ prewritten job descriptions in the Job Descriptions Encyclopedia now come with pay grades already attached. Click here to try the program at no cost and receive a limited time bonus.

Revised for the ADA, Pay Grades Updated

There was a major revision, for example, following the passage of the ADA. In fact, BLR editors reviewed every one of those 700 descriptions to ensure they were ADA-compliant.

Another enhancement was the updating of pay grades for each job. According to our customers, this is an enormous time-saver, enabling them to make compensation decisions even as they define the position. You can see a sample job description from the program by clicking here. (Yes, it is the one for HR Manager—Pay grade: 37.)

The BLR Job Descriptions Encyclopedia also includes an extensive tutorial on setting up a complete job descriptions program, and how to encourage participation from all parts of the organization. That includes top management, the employees, and any union or other collective bargaining entity.

Quarterly Updates, No Additional Cost

Very important these days, quarterly updates are included in the program as a standard feature—key at a time of constantly changing laws and emerging technologies. We’ll send you new or revised descriptions every 90 days. And the cost is extremely reasonable, averaging less than 43 cents per job description … already written, legally reviewed, and ready to adapt or use as is.

You can evaluate BLR’s Job Descriptions Encyclopedia at no cost in your office for up to 30 days. Get more information or order the Job Descriptions Encyclopedia.

Download product sample
Download list of job descriptions included