POWERFUL ADVOCATES

Independent Contractor Misclassification and Compliance

LEADERSHIP: Michael J. Crumbock, Matthew V. DelDuca and Lisa B. Petkun

Over the last several years, Pepper has handled independent contractor compliance and misclassification matters for dozens of clients based in more than 20 states. We have represented clients in scores of industries. Our engagements include:

Compliance

  • restructuring and re-documenting independent contractor relationships, including updating and adding state-of-the-art provisions to independent contractor agreements in order to enhance compliance with state and federal independent contractor laws

  • preparing decision matrices and manager toolkits on how to hire contingent workers in a manner consistent with state and federal independent contractor laws

  • updating and enhancing websites and marketing material of businesses that use independent contractors to ensure language used is consistent with independent nature of contractors

  • drafting comprehensive independent contractor provisions to ensure subcontractor compliance with new state laws regulating the use of independent contractors in the construction industry

  • examining independent contractor laws in multiple states for clients seeking to expand operations using independent contractors

  • drafting best practices and other internal communications and materials for clients consistent with their structured or restructured independent contractor relationships

  • creating training programs for companies using independent contractors

  • advising clients on preventive steps to avoid the hiring of temporary and casual consultants as independent contractors for projects throughout the United States where compliance with state and federal laws may be in doubt

  • assisting clients in various industries in voluntarily reclassifying workers previously treated as independent contractors or redistributing such workers through the use of workforce solution, staffing and temporary employment agencies

  • advising clients that are contemplating independent contractor relationships that would not comply with state and federal tax and labor laws to classify new workers as employees or engage a workplace staffing company to hire its projected employees

  • analyzing employee benefit plan documentation for several clients to determine if the eligibility provisions effectively “carve out” groups of independent contractors if they are re-characterized as common law employees, and determining if the exclusion of contractors impacts nondiscrimination testing requirements under ERISA

  • advising clients in selected industries on lobbying state legislatures regarding independent contractor bills..

Misclassification

  • defending national, regional, and local companies at unemployment, workers compensation, disability benefits, and tax proceedings including hearings by state governmental agencies where a claimant or regulatory agency has challenged the classification of one or more service providers as independent contractors and seeks benefits and/or an assessment of taxes and penalties for a claimant and similarly-situated workers

  • formally protesting a government agency’s failure to issue a procurement contract to a government contractor based on the independent contractor status of service providers

  • commencing a lawsuit in New York seeking a declaratory judgment that a service provider claiming to be a common law employee was an independent contractor in response to the service provider’s threatened tax proceedings in a foreign jurisdiction

  • representing a national online language school in a regulatory/enforcement investigation in Massachusetts regarding independent instructors

  • conducting due diligence and assessing the potential for misclassification liability of companies that make use of independent contractors for clients seeking to acquire or invest in such businesses

  • calculating the labor, employee benefit and tax liability of a company faced with multiple lawsuits and enforcement proceedings for a client that was contemplating investment in the company.