The next time you want to give a fright to your human resource department (and who doesn't?), call them up with a handkerchief over the receiver, breathe heavily and say "I know you're not independent contractor compliant." The odds are you'll be right, and in the current legal environment few things are more fraught with danger.
In our recent 2009 Contingent Buyer Survey, we asked buyers "In your best estimate, what percent of your 1099/independent contractors are properly classified?" Only one in five said 100%. That means four in five buyers are likely bearing at least some degree of non-compliance risk.
And what is this risk? Well, prison for one thing. If the powers that be decide your failure to collect and remit withholding taxes was "willful," i.e. you should have known better (maybe because someone called you in a muffled voice and affirmed your own suspicion that you're not independent contractor compliant) that willful failure amounts to a felony. And then too there are the untold financial penalties, state and federal.
By the time you're through with a charge like that you'll be bankrupt, and so riddled with tax-related felony convictions you'll be unqualified for anything but a political appointment.
Eager to avoid such disgrace, the more canny contingent staffing buyers are already signing up for independent contractor screening and compliance services. In our recently released report on all this, 37% of buyers said they were currently using a vendor for independent contractor screening/compliance and another 34% said they might do so over the next two years.
All of which brings me to my actual point. If you're a buyer you may want to consider these services as a shield to legal risk; if you're a staffing supplier, you may want to start selling these services, or at the very least let buyers know that hiring a temp is a much safer practice than hiring a potentially non-compliant contractor.
Contingent employment relationships are getting legal and regulatory scrutiny like never before, and not in a good way. You can keep track of those legal and regulatory changes in our monthly Legs & Reg Advisor.