1099 Compliance White Paper for the Employer and Independent Contractor

FedEx and Microsoft have endured intense legal battles involving class action lawsuits stemming from independent contractor reclassification by state and federal agencies. These companies are not alone. Today, the U.S. government is owed billions of dollars due to the misclassification of employees as independent contractors. Now, state and federal agencies are aggressively targeting employers who engage an independent contractor workforce in an attempt to retrieve what is theirs.

When weighing the benefits of an independent contractor vs. employee advantages, the former is sometimes favorable – particularly in the current business climate. However, the potential liability associated with misclassifying these workers can lead to financial ruin. The growing use and simultaneous need for 1099s forces the question: How do employers keep the specialized talent they need and stay compliant with state and federal regulations?

This white paper reviews two of the most prevalent legal cases in the worker misclassification battle, the FedEx and Microsoft lawsuits, and examines the independent contractor vs. employee issue in the midst of what has become one of the most significant and complex issues in employment law.

What is expected of employers under state and federal regulations is not always clear; this paper gives readers a glimpse into the circumstances that determine 1099 versus W-2 classification, and what employers can do to save their companies from financial disaster resulting from incorrect employee classification.