Home > Workmens Compensation > How to Avoid DOL Compliance Audits and Mis-classifying Independent Contractors

How to Avoid DOL Compliance Audits and Mis-classifying Independent Contractors

Compliance is what we are talking about–not assigning the wrong classification codes to an individual or issuing 1099s to employees or anyone else hired on a temporary basis. Most states have redefined the independent contractor after 2009 to purposely generate premiums assessments.

It is all about compliance to state administrative codes. The Department of Labor knows small businesses are lousy records keepers and are easy prey. Very few workers’ compensation payroll, HR, and insurance companies have compliance officers to monitor these trends.

Here’s the answer to justifying and and hiring independent contractors:

1. In any audit, does the person have the capability to hire employees or other independent contractors. This is the first question an auditor asks. This answer follows the national trend that if someone is capable of hiring employees he is exempt from audit.

2. States are demanding independent contractors carry their own workers’ compensation insurance to prove their independence. During the housing boom, independent contractors would not be hired unless they could prove they had a workers’ compensation insurance on themselves or their hired employees. Statute exempts owners of companies.

3. If the independent contractor is classified in the same business by analogy, he will be asked to pay workers’ compensation.

4. The independent contractor will be required this year for the first time in America to provide a medical insurance policy number on his 1040 courtesy of the Affordable Care Act. This actually is a gift for the small independent contractor who cannot afford real medical insurance for themselves or their family.

There are many tools available to keep track of these employee/independent contractors on cell phones and affordable SaaS desktop programs. They guide the user through menu driven tabs to make sure who works as an employee or independent. Just make sure the company uses the word ‘compliance’ and not ‘time keeping’ in their advertisements.

It is no surprise the government is telling the hiring authority and independent contractor how to run their business. Spending a little more time keeping track of compliance issues to avoid Department of Labor and insurance company audits is just apart of the new American workforce DBA independent contractors.

Categories: Workmens Compensation
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