World Fence News

68 • JANUARY 2020 • WORLD FENCE NEWS Shoring up profits in a tough economy means trimming expenses wherever you can. Uncontrolled labor costs, in particular, can eat up the bot- tom line for most employers. No mystery, then, about the appeal of independent contractors. They can be utilized to perform tasks without an attendant rise in payroll expenses such as premiums for health care, un- employment insurance and workers' compensation. "Cost savings is perhaps the num- ber one reason for using independent contractors," said Barbara Glanz, a management consultant based in Sarasota, Fla. (barbaraglanz.com). "The second reason, which is maybe even more important, is that outside specialists are experts in their fields as opposed to jacks of all trades." And there's a third advantage to using independent contractors: flexi- bility. In a volatile economy, after all, it's difficult to predict how many peo- ple you'll need down the road. "Many employers want to main- tain just a small core of full time employees and hire independent con- tractors as needed," said Nancy E. Jo- erg, managing shareholder and senior attorney of the St. Charles, Illinois office of Wessels Sherman Joerg Lisz- ka Laverty Seneczko P.C. (w-p.com). "That's much less risky than hiring a large number of full time workers, then terminating some when econom- e rising risks of misclassifying independent contractors BY PHILLIP M. PERRY ic conditions demand. Such termina- tions can spark lawsuits and addition- al filings for unemployment benefits." Avoid costly fines Yet employers face risks in uti- lizing independent contractors. The problem is that federal and state agen- cies can later reclassify such workers as employees, sparking huge fines and penalties. And the risk has escalated in re- cent years. In the summer of 2015 the Wage and Hour Division of the U.S. Department of Labor (DOL) filed an interpretation of independent contrac- tor law which, in essence, announces the intention to step up enforcement actions against employers who, de- liberately or not, misclassify workers. (You can view this document by going to dol.gov and searching for "Admin- istrator's Interpretation No. 2015-1"). "The DOL is sending a clear mes- sage that they are going to be harshly evaluating the status of independent contractors," said Joerg. "They are go- ing to strictly interpret their six-part 'economic realities' test to determine if independent contractors are eco- nomically dependent on their employ- ers. If they are, then the employers may be in trouble and may be finan- cially in a lot of pain." As those comments suggest, the DOL uses an "economic realities test" to determine whether an individual is an employee. (You can view an expla- nation of the test by going to dol.gov and searching for "Fact Sheet 13: Am I an Employee?"). This new initiative comes as part of a long-standing effort to stem the increasing use of independent con- tractors. "Government agencies at the state and federal levels have been crack- ing down on independent contractor misclassification for the last several years," said Dallas employment law- yer Barry Hersh (hersh-law.com). What is the reason for the new en- forcement interest? "If employees are not classified properly, then taxes (Social Security, Medicare, unemployment) are not be- ing correctly withheld," noted Hersh. "The government wants its money. Also, the government wants to ensure that workers are being afforded their rights under anti-discrimination and other laws that protect employees." Multiple threats Suppose you inadvertently mis- classify your workers. What problems can arise? Enough to compose what Hersh refers to as "a parade of horribles." For starters, federal agencies may assess fines for failure to withhold taxes or to comply with workers com- pensation laws. More penalties may be assessed for violations of the Fami- ly Medical and Leave Act and ERISA. Among the costliest penalties are those relating to employee remuner- ation. Under the federal Fair Labor Standards Act (FLSA), misclassified employees can recover unpaid over- time and minimum wages for the past two or three years, and such wages can be doubled under a penalty called "liquidated damages." State agencies may levy penalties for failure to collect taxes and to pay continued on page 75 - C u s t o m F a b r i c a t i o n a v a i l a b l e f o r V i n y l , A l u m i n u m , o r S t e e l p r o d u c t s. S e n d u s y o u r d e s i g n f r o m P i n t e r e s t o r y o u r A r c h i t e c t ! - D e l i v e r y i n S o u t h e a s t o n o u r o w n t r u c k s ! - E x p o r t a n d C o n t i n e n t a l U S - LT L o r F l a t B e d o r C o n t a i n e r S h i p s A v a i l a b l e. - - L A R G E S T I N - S T O C K S p e c i a l t y F e n c e S e l e c t i o n i n t h e S o u t h e a s t U n i t e d S t a t e s ! K i c k O f f w i t h a C h o o s e P o l y V i n y l C r e a t i o n s B e c a u s e : - M u l t i - G e n e r a t i o n a l C o m p a n y u n d e r S A M E F a m i l y O w n e r s h i p. - D e d i c a t e d t o t h e G R O W T H o f t h e F e n c e C o n t r a c t o r - F o c u s e d o n E F F I C I E N C Y a n d D I S T R I B U T I O N w i t h t h e w i d e s t v a r i e t y a v a i l a b l e o n t h e m a r k e t t o d a y. - D e d i c - D e d i c a t e d t o P R O C E S S I M P R O V E M E N T a n d f e e d b a c k f r o m c u s t o m e r s. w w w. j u s t p o l y i t . c o m w w w. p v c b r o c h u r e s. c o m C O N TA C T U S N O W : m a r k e t i n g @ p o l y v i n y l c. c o m

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