Prevent Lawsuits by Classifying Workers Correctly

Prevent Lawsuits by Classifying Workers Correctly

staffing agency insurance

The IRS has recently started to crack down on the misclassification of employees. It’s a growing problem in America for two key reasons. First, the number of contractors or contingent employees has greatly increased. The rules have changed and become more complex as to how to classify staff for the ACA and tax purposes. Staffing agencies should be carrying staffing agency insurance to manage their risks in temporary employment.

When classifying employees, a business has to ask itself about the level of control and independence of a worker. It usually falls into three categories:

  • Behavioral – Who controls how the worker does the job?
  • Financial- What financial aspects of the job is controlled by the employer? Does the employer furnish tools and supplies or reimburse expenses?
  • Type of relationship – What written contracts exist between the employer/employee? How vital is the work to the business?

If an employee is misclassified as an independent contractor, the business may be liable for back taxes on the employee. A business needs to keep good records and look at the entirety of the relationship between the employee and employer. Carry staffing agency insurance to protect your assets in the case of a misclassification or other liability. Have peace of mind in your business and give your employees security.