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Employee misclassification: 2 ways to reduce your risks

Businesses are increasingly relying on independent contractors to access a rich pool of highly skilled and agile talent. Independent contractors also save businesses money.

However, despite its many benefits, one of the challenges that come with independent contracting is employee misclassification. Worker misclassification happens when the organization classifies a worker as an independent contractor when the scope of their work qualifies them to be an employee.  

Here are two practices that can help your organization steer clear of worker misclassification

Streamline your contractor engagement programs

In partnership with the HR department, it is important that you develop an organization-wide program for recruiting and engaging independent contractors. 

Alongside a streamlined contractor engagement program, it is equally important that you have a watertight contract for all independent contractors in your organization. The contract should clearly define the working relationship as well as the rights and responsibilities of both parties. 

Routinely audit your recruitment process and policy

Proper worker classification begins with how workers join your organization. By performing a routine audit of your recruitment practices, you will gain an insight into your organization’s hiring and classification processes and whether they are compliant with the applicable laws. 

Review the records of each of your contractors, terms of engagement, the scope of their work and any other relevant factors that could divide them from regular employees. A regular audit of your recruitment process and policy can help you identify wrongly identified workers and effect corrections before the regulatory agencies show up with their own audit. 

Employee misclassification is a big deal and often comes to light when there’s a workers’ compensation claim from a contractor who believes they’re an employee. If that happens to you, make sure you get experienced guidance for your defense.

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