Define Employee vs. Independent Contractor

Date: March 06, 2017

The current 20-factor common law test to determine who is an employee vs. an independent contractor continues to handcuff small businesses. The instructions in the common law factor test are vague and unclear, which make it difficult for small businesses to know whether they are complying with the rules.

One of NFIB’s legislative priorities is to better define who is an independent contractor. NFIB is closely monitoring Congress for the introduction of legislation that would change the current independent contractor rules and make it harder for a business owner to classify workers as independent contractors.

NFIB opposes any legislative proposals that would:

  1. Eliminate safeguards in the law protecting business owners from liability when classifying workers as independent contractors based on accepted industry standards
  2. Allow independent contractors to go directly to the IRS and ask to be reclassified
  3. Require the IRS to work in conjunction with the Department of Labor about misclassification violations, exposing small business owners to additional audits and legal actions
  4. Increase reporting and paperwork requirements on small businesses

NFIB has joined forces with the Small Business Legislative Council and other business groups to monitor legislative and regulatory activity in this area. In addition, NFIB will be working to find a solution to finally clarify these confusing and onerous rules. 

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