A common practice in the security business is the use of independent contractors. While that might have been something that was done only on occasion or even consistently without giving much or any thought to the legality of the arrangement, the legal and financial perils of doing it incorrectly today are much greater today than in the past.
The U.S. Department of Labor, now in partnership with the Internal Revenue Service and at least 15 states has launched an all-out assault on employers who misclassify employees as independent contractors.
In short, these initiatives are designed to collect additional taxes from companies using contractors, and prospectively, restrict classification of workers as independent contractors.
Two pieces of legislation to codify new regulations – and penalties – were introduced in the U.S. Senate in November: the Payroll Fraud Prevention Act of 2013 (S.1687), and the Fair Playing Field Act of 2013 (S.1706).
Both of these bills will place additional regulatory and reporting burdens on ALL businesses, eliminate decades old “safe harbors,” and increase penalties for violations-even if they are inadvertent.
I will be posting more about these new legislative proposals. In the meantime, I am soliciting information about the use of independent contractors in the security industry.
Specifically, are you using independent contractors, and to what extent are you protecting yourself from misclassification penalties? All comments and information, even anecdotal will be useful. Moreover, it will remain confidential.
If you are uncomfortable posting your comments and stories publicly in this forum, I invite you to privately message me, or write me directly at [email protected]. You can also use the Contact PSC tab at the top of the page.
Michael Nossaman is the founder of the Protective Security Council.
Photo courtesy of FreeImages.com/Harrison Keely