Watch Your 1099 Classifications

Recently, we attended a talk about independent contractor status, which is a controversial item these days because of Obamacare and the reqirement, if you’re over 25 employees, to have some sort of insurance in place.

We also had a chat with one of our former Solutions Forum members and outlined some of the things mentioned at the talk, and opened his eyes a little bit. He’s probably in compliance, but his #2 is probably going to do an internal audit.

We won’t go into all the requirements here, but suffice it to say that if you get audited by the IRS or the Department of Labor, your state revenuers might just pay you a visit to find out how many hours your independent contractors are working, and whether it’s over 29 per week, which would make them subject to employee status, which would make them subject to mandatory health insurance.

And now, they’re coming to take me away, haha…….and this is no April Fool’s joke, either.

To review, a person can be classified an employee if you  supply all or  of most of their income, give them a place and time to work for between 29 and 40 hours a week.

We don’t know (and are afraid to ask) if you can keep someone on independent contractor status 1099 while they’re in training. It’s easier to have a training status, but frankly, we don’t know if it’s legal. We do know that some large companies pay benefits from day one, but we don’t think this practice is widespread.

Below 29 hours, it seems to us that you can classify them as contractors. but you’re over 50% of their time.

Go consult a labor attorney before the IRS and the Department of Labor come snooping around.

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