Federal Government to Crackdown On Use of "Contractor" Classification

A growing number of companies have cut costs by wrongly classifying regular employees as independent contractors.  By paying "contractors" (workers) with 1099 payments, companies can avoid paying Social Security, Medicare and unemployment insurance taxes for those workers.  Further these workers are not covered by the company's workers compensation insurance.  Meanwhile, the Obama administration is set to crack down on this type of activity by hiring 100 more enforcement personnel.  Currently the IRS is auditing 6,000 companies to see if they are in compliance with the law.  Fines for wrongly classifying workers can be significant.  In November the Illinois Department of Labor imposed over $300,000 in penalties on a residential contractor for the misclassifying 18 workers.


Some staffing companies also pay their employees as "contractors" with 1099 payments to cut costs.  Contractors should make sure they are not exposed to this practice.   By using Construct Corps for you job site labor you can be assured that all workers are probably covered and paid, and with rates built around the contractor's budget, still keep costs down.


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