New York SBDC Research Network

By Linsey Knerl From NAV There was a time, not long ago, when businesses in every industry grew with the labor and talent of workers classified as independent contractors. Even before the “gig economy” and “side hustles” were buzzed about (and companies like Lyft and Uber made them newsworthy) small businesses everywhere relied heavily on contract workers provide the bulk of their services. Hairdressers, construction workers, writers, and dog walkers were all classified as independent contractors with little to no challenge to their status, but all of that is changing. A recent California Supreme Court ruling, along with a handful of state and local ordinances have made some strict interpretation of who can—and who can’t—be called a contractor. Washington state has even produced a "step by step guide" for businesses to classify and hire their workers with the appropriate classification. While the exact rules differ slightly from region to region, there is a common thr

It was only a week ago that I saw a request for information on how Uber drivers were defined. This appears in today's New York Times:   TECHNOLOGY California Says Uber Driver Is Employee, Not a Contractor By  MIKE ISAAC  and  NATASHA SINGER JUNE 17, 2015 ... ... The classification of freelancers is in dispute across a number of industries, including at other  transportation  companies. And the debate is set to escalate as the number of online companies and apps like Uber and others rises. Venture capitalists have poured more than $9.4 billion into such start-ups — known as on-demand companies — since 2010, according to data from CB Insights, a venture capital analysis firm, spawning things like on-demand laundry services and hair stylists... ... “Today’s ruling from the California labor regulators demonstrates why federal policy makers need to re-examine the 20th-century definitions and employment classification we’re attempting to apply to a 2

We all make mistakes. So let me refer you to number seven of the Dali Lama of Tibet’s “Eighteen Rules of Living,” where he gives us the following advice, “When you realize you’ve made a mistake, take immediate steps to correct it. And do not let your pride get in the way of taking those steps.” The main idea is that trying to hide a mistake, once you have become aware of it, by pretending it didn’t happen only perpetuates the goof up and inevitably leads to sinking deeper and deep into the quicksand of oops. There has to be a more than a million zillion possible copyright related snags and unintentional misunderstandings that lurk within the professional shadows just waiting to trip up even the most seasoned of freelancers. This article seeks to aid freelancers in avoiding a nasty stumble by illuminating the wiles of three of the more common snares that imperil the footsteps of the unwary. More from the ASBDC .

The use of independent contractors are a flexible option for employing workers and a legitimate way to avoid some payroll tax obligations. But government authorities are on the lookout for employers who misclassify their workers, when they are really employees. Read about the the most recent government efforts to correct this type of activity, whether it was done accidentally or on purpose. However, a new government (IRS) program allows employers to reclassify their employees on a voluntary basis, drastically reducing any back taxes or penalties owed on the status change. But only if you go to them first. For more details on what steps you can take to manage this issue, see the story on correcting worker misclassification . IRS Makes Voluntary Reclassification of Workers Less Taxing

Yesterday, CNN Money ran a story called " Auditors Crack Down on 'Independent Contractors' ," echoing a similar story that appeared in the New York Times back in February. We've written before on how the IRS differentiates when a person is an employee, or when he or she is considered to be a contractor. Check out the link in that post to an IRS document that spells out the difference between the two. Companies who utilize independent contractors are not obliged to pay unemployment insurance, or worker's comp, or Social Security taxes, or Medicare taxes . . . As these articles mention, at a time where the majority of state unemployment insurance coffers are empty, great interest in auditing companies with significant utilization of contractors has revived. Seven billion dollars is seven billion dollars, which is what the IRS is hoping to generate by conducting these reviews throughout the country. If your business is in the habit of using contractors, mak

I feel for small business owners - from my perspective, I hear their tales of woe and I am impressed with their initiative and drive. But every once in awhile I find myself on the other side of the equation as the small business customer and I really wonder how they function. I have been trying to find a contractor to do some work. It occured to me that I had already met a person refered to me by a local architectural planning non-profit- someone I trust and have faith would do a fine job. So I emailed him - via his web site. He replied promptly - to say that I should call for an appointment. And I thought, why? This is after all a form of communication. But I called, and left a message. Then he called me back and left a message. Then I called and left a message and then he called me at work on a national holiday and left a message and so on. And I thought, this is ridiculous. If he had emailed me back and said: "I have time here, here and here: choose one." I would have and

I reminded myself to check out our shelves and lo, success! A source that I am sure we have described before but here it is again is the Consultant & Independent Contractor Agreements book by Attorney Stephen Fishman for Nolo. It comes with a disk with the sample contracts. The book covers hiring contractors and working a contractor. There is a chapter on negotiating contracts - a sample for the hiring firm and one for the contractor.

A question we were asked recently: Does a business need to get I-9 forms (employment eligibility verification) from its independent contractors? My answer: No. And yes. No, it’s not required of them, but if someone, say Wal-Mart, had a bunch of illegal immigrants working 60-hour weeks with no overtime on their behalf, that would look bad for Wal-Mart. Wait, that DID happen . From this law site : The government is looking beyond the mere labels of "independent contractor" to see if the employer had knowledge of its contractors' practices. In this type of environment, prudent employers who do not want to be the target of a federal investigation or prosecution will review their immigration law compliance efforts and make sure that they, and their executives, are not aware of violations by their contractors... At a minimum, require your contractors to furnish you with copies of Forms I-9 and supporting documentation for the workers they bring onto your site. From this legal