Issues To Qualify Employees

860 Words4 Pages
An important issue that is currently making headlines and is making its way onto the radar of many human resource (HR) departments across the country involves the way businesses classify their workers. The issue specifically has to do with whether workers are being classified as employees or independent contractors under the Fair Labor Standards Act (FLSA). These classifications are important as each one triggers a different set of tax, benefit, discrimination, health care, workers compensation, and unemployment insurance obligations under which an employer must abide. Many of the obligations that an employer faces with respect to this list of issues become more onerous and costly when workers are classified as employees. That is why for years…show more content…
A problem has arisen, however, as different agencies have provided different guidelines, leading to confusion, an inability of regulatory agencies to enforce standards adequately, and the misclassification of many workers as independent contractors. (Covington 1). Just this year several court cases involving high profile companies (e.g. Uber, FedEx) have been centered around this misclassification issue. In many of these cases courts are ruling against the company, declaring that they have indeed misclassified workers as independent contractors. As an example the ninth circuit court issued a ruling last year against FedEx which lead to FedEx establishing a…show more content…
In the early stages of a new company financial resources are precious and often times hard to come by. Consequently many start-up companies seek to minimize their expenses, the largest of which is often related to the people the company employs. Designating such people as independent contractors is, and has been, a popular tactic used to limit such expenses. However moving forward it will be imperative that companies are aware of the increased scrutiny on this practice and take calculated steps to protect themselves from the risk that misclassification presents. Businesses should be aware of the factors that are looked at when determining a workers classification and make an effort to design their jobs in such a way that they demonstrate the characteristics of work done by independent contractors. Additionally, such efforts should be documented thoroughly in case justification is ever

More about Issues To Qualify Employees

Open Document