In 2015, the Department of Labor (DOL) found that roughly 75% of employers were misclassifying workers. Employers that pay workers as 1099 contractors, without fully qualifying the classification, cost the federal government nearly 3 billion dollars annually. Why? These errors cause certain employment taxes to go unpaid. Workers who are misclassified also lose out on the guarantee of minimum wage and overtime. Adding to the concerns is the fact that most businesses pay at least some of their workers on a salary basis. This normally means the worker receives the same amount of money every week, with no consideration of overtime. The Department of Labor has issued an update to the regulations governing overtime exemptions which is expected to make more workers eligible for overtime under federal law. This means many who are not receiving overtime pay today will find themselves eligible on or before December 1, 2016. In addition, 40% of currently “overtime-exempt” classified workers will be receiving pay increases to salaries that meet at least $913.00 per week. Will your business be ready for the changes?
The misclassification of employees has been a hot topic with the IRS and the Department of Labor for years. Efforts to identify and audit employers who classify workers as exempt from minimum wage and overtime payments have been ramped up. The Questionable Employment Tax Practices Initiative (QETP) was created to bridge the gap between federal and state agencies that identify these errors. The IRS and the Department of Labor have also added more than 100 new investigators over the last two years. Both agencies have made their positions very clear that employers who fail to pay employees all of the wages due to them risk steep penalties. If your business received a visit from one of these agencies tomorrow would your employee classifications pass the tests? Do you know which tests to administer? If you determine an employee has been misclassified, what will you do? This webinar will help you answer these questions and many others with confidence.