What an Independent Contractor Is - Essay Example

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Summary

From the paper "What an Independent Contractor Is" it is clear that the individuals presented in the scenario are at risk of being improperly classified and are facing an audit from the Department of Labor, and one of them even got into an automobile accident…

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Subject: Law
Type: Essay
Level: High School
Pages: 1 (250 words)
Downloads: 2
Author: xernser

Extract of sample "What an Independent Contractor Is"

Stump and Sprohge in the Journal of Accountancy, “There are a number of benefits to the contracting party of classifying a worker as an independent contractor, including no medical insurance costs, no need to pay retirement benefits and recordkeeping and other administrative cost savings. However, if the IRS later reclassifies a contractor as an employee, the employer faces liability for back payroll taxes, possible criminal sanctions, and invalidation of benefit plans.” (2004) These are things to keep in mind when an organization is facing an audit from the Department of Labor. It would be best to thoroughly review the laws governing independent contractor categorization before the audit process begins in order to ensure that the independent contractors are properly classified.

As far as the school bus accident is concerned, it would again be best to review the laws governing the liability of the organization when an accident involving an independent contractor is concerned. It is most likely that the liability of the accident will fall into the hands of the person who is actually at fault for the accident rather than the employing organization, as it may first appear. Since companies who hire independent contractors rarely carry insurance on these individuals, there may be a significant problem arise (Freelawanswer, 2010).

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