Employee vs Independent Contractor (Training Edition)

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Topics Covered

Independent Contractors and the Tax Gap
Tax Cut & Jobs Act’s Impact on Issue
Penalties and Cost of Getting it Wrong
Four Types of Workers; Statutory Employees, Statutory Non-Employees, Common-Law Employees, Independent Contractors
Three Common Law Factors: Behavioral Control, Financial Control, & Relationship
Twenty Factor Test
Impact of Employee Retirement Income Security Act
State Trends & ABC Tests
Three Levels of Classification Risk
Reducing Risk of Reclassification
Importance of Sending Form 1099-NEC & MISC
Worker Recourse when Misclassified, Non-IRS Worker Recourse
Form 8919 Uncollected Social and Medicare Tax on Wages
Form SS-8 Determination of Worker Status - Employee or Independent Contractor
SS-8 Investigation & Process, Tips, Determination Letter & Results and Investigation Statistics
Reclassification and Retroactive Reclassification, Consequences to Worker and Business/Organization
Section 3509 Relief
Business Defenses and Relief
Section 530 Employer Relief (Safe Harbor)
Form 8952: Voluntary Classification Settlement Program

Affordable & Effective Training You Own and Can Make Part of Your Employee Development Program.

The importance of correctly classifying workers as employees or independent contractors has never been greater. It is no longer just businesses seeking to cut costs by hiring independent contractors. The Tax Cut and Jobs Act of 2017 created a 20% income deduction for business owners, incentivizing employees to become independent contractors.

The definition of the employer-employee relationship, however, has not changed and cannot be circumvented by agreement between business and worker.

Additionally, many states are broadening the employer-employee definition as they attempt to make gig workers (such as those working for Uber) and independent sellers (such as those selling Tupperware) employees. Misclassification of employees can literally bankrupt a business. To protect yours, learn to properly navigate the Employee vs Independent-Contractor classification process.

If the IRS finds the relationship between a business and workers treated as independent contractors to be incorrect, the IRS can (and will) retroactively reclassify those workers as employees. If a business misclassifies a single employee, it will face years of back taxes, unfiled or amended payroll returns, and amended income tax returns. Misclassifying more than a handful, however, can be the death-knell for many businesses. They will owe a crushing amount of unpaid employment taxes, tax filings, and amended income tax returns. They may also be liable for benefits employees did not receive while misclassified.

Why OA’s Employee vs. Independent Contractor Course?

Our Independent Contractor vs. Employee course covers everything you and your employees need to know to correctly classify workers, avoid reclassification, and minimize the cost of reclassification if and when it occurs. The Independent Contractor vs. Employee Course contains two hours of video broken up into eight easily-navigated lessons.

When you purchase our Employee vs. Independent Contractor Training Course, you own it! Our license agreement allows you to use this course over and over to train your employees! In addition to the ton of resources included with the course, this training course includes:

A pdf of each lesson’s PowerPoint so students can follow along and take notes,
Review questions for each lesson,
Answer guides for review questions,
An exam to test each student’s knowledge of the subject matter,
An answer guide for the exam, and
A frame-worthy Completion Certificate for students who complete the course.

Lesson Listing

Here is a list of the lessons in this course and a brief description of what you'll learn in each lesson.

Intro & Impact of the Tax Cut and Jobs Act
In this lesson, you will learn why determining whether a worker is an employee or an independent contractor is so important and consequential. You’ll also learn why provisions in the Tax Cuts and Jobs Act make converting employees to independent contractors extremely attractive (and extremely dangerous).
Challenges of Classifying Workers & Four Types of Workers
This lesson highlights the highly subjective nature of the worker classification process, introduce the four types of worker classification: Statutory Employees, Statutory Nonemployees, Common-Law Employees, and Independent Contractors. It will then focus on rules regarding Statutory Employees and Statutory Nonemployees.
Common Law Employees & Three Common Law Tests
Common Law Employee is a technical term for what we know as an employee. What makes an individual an employee, however, is based on the amount of control the payor has over the activities and finances of the worker. This lesson will provide an overview of the three common law factors (or tests) used to determine the amount of control the payor has over the worker.
Avoiding Worker Reclassification as Employees
As you may be realizing, determining whether or not a worker is an employee or an independent contractor is not always an easy task. The tests for making such a determination are subjective and open to interpretation. This lesson will discuss three levels of risk based on the type & class of worker.
Recourse for Misclassified Workers
This lesson will cover the ways employee status investigations can begin without the worker's direct involvement. It also includes options available to workers treated as independent contractors who believe they are employees with a particular focus on Form SS-8 and the SS-8 Investigation.
Reclassification Consequences
The vast majority of Form SS-8 Worker Status Determination Investigations result in the worker reclassification as employees. This lesson covers the requirements reclassification places on the worker/employee and the payor/employee. It also discusses relief via Section 3509, which may reduce the cost of worker reclassification.
Business Defenses and Relief - Section 530
This lesson covers the all-important Section 530 Relief, which prevents retroactive & prospective reclassification and allows businesses to continue to treat workers as nonemployees, that is the same as they did before.
Business Defenses & Relief (continued)
Our final lesson covers two essential relief mechanisms available to employers who do not qualify for Section 530 Relief: The Voluntary Classification Settlement Program and the Classification Settlement Program.

All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.

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