The issue of classifying workers as employees or independent contractors has become an extremely complex one. It comes into play in many different legal arenas, including imputed tort liability, workers’ compensation, unemployment, and taxation. Moreover, the stakes are extremely high, as the exposure, including taxes, can be staggering. Indeed, if independent contractors are ultimately held to be employees, the exposure for tax liability alone may threaten the ongoing financial viability of many entities.
Awareness of issues surrounding worker classification has been growing throughout all types of industries (this article focuses on the transportation industry) and is the result of increased enforcement actions and challenges by various government entities to the classification of workers as contractors. For example, federal “worker misclassification” legislation has been proposed. In addition, the Internal Revenue Service recently launched an initiative focusing on more aggressive audits of companies to examine the classification of their workers as contractors.