In this course we discuss the requirements needed to determine if a worker is an independent contractor or an employee under various federal and state regulations.
We start with a brief review of the basic characteristics of both types of workers. From this we discuss the Internal Revenue Service’s three categories of Evidence of Control, or what is known as the “three factor test”, to determine whether a worker can be classified as an independent contractor under the IRS rules. This leads to a conversation about the requirements for each of these types of workers under the wage and hour rules. We then examine the IRS form that can be used to help determine the worker’s status.
We review examples of scenarios that can trigger an independent contractor audit and the penalties that can be assessed if the worker is determined to be misclassified. To complete the course, we discuss various examples of state regulations as they pertain to worker classification. This course serves as a sound basis to assist human resources, payroll, or finance professionals in determining how to properly classify a worker as an independent contractor.
Learning Objectives
- Discover and define the requirements under the IRS regulations that are used to classify workers as independent contractors.
- Identify the requirements that must be met to classify a worker as an independent contractor under the federal wage and hour laws.
- Explore and explain how to use the IRS Form SS-8 to assist in making the proper classification for a worker.
- Identify the state requirements for proper classification of workers under the ABC test.
- Explore and explain the penalties that can be assessed for misclassifying a worker.
- Identify the IRS program that can assist an employer in mitigating the penalties for misclassifying a worker.
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Prerequisites
Prerequisite: Exposure to US income taxation
Advanced Preparation: None