Much ado about nothing
The Obama Administration announced yesterday the government will spend about $900 million dollars over the next 2 years to rebuild America’s infrastructure. The housing bubble in America bursts, consumers have no money to spend, businesses decreased product production and the final result is a net loss of 2.4 million jobs in 2008. The economic forecast calls for even more pain and suffering well into 2009. Obama’s new job suddenly just got a little bit bigger and his list of to do’s just grew a little bit longer. Although the weight and magnitude of the countries woes continues to grow, word on the street is the President Elect may be distracted by bigger issues. Say it isn’t so! Are we to believe the American people will just have to take a back seat to the passage of a few labor related bills? Absolutely! After all Obama co-authored two of the bills, made campaign promises to the Unions and the great compliance prophets have predicted employer Armageddon is close at hand.
the Feds have threatened for years to put a halt to illegal employer payroll practices.
All kidding aside the Feds have threatened for years to put a halt to illegal employer payroll practices. However, the states continue to lead the Feds in auditing efforts and passage of laws to help catch tax cheats. For example the State of California sent out employment relationship questionnaires to workers who were paid as independent contractors to ensure the workers were not really misclassified employees. In the past industry experts have forecasted an IRS tsunami for tax cheats but at the end of the day it was little more than a rain shower. Unfortunately the end result of depicting the IRS as the boogeyman only to have it fizzel left many employers desensitized to a real threat.
Good news! Under the new administration you can count on a whole new ball game complete with new rules and harsher penalties for foul balls. A provision for a massive overhaul of the broken payroll tax system exists in Obama’s economic recovery plan. How soon can we expect to see these changes? Sorry but I seemed to have misplaced my glass ball and tarot cards.
So what can you do right now to get ready? Dig into your independent contractor pool and ask questions. Find out who they are and ask why they classify as contractors. If headcount constraints comes up in any conversation look out! In an audit who will be named as the employer of all misclassified independent contractors? You! Take advantage of the extra time you’ve been given. If you have contractors but no files to support the classifications start building them right now.
Rest assured a change is a coming!
