At LASSO, we are regularly asked about employee misclassification and the evolving debate surrounding the subject. Many companies do not know where to start when it comes to understanding all of the nuances involved in properly classifying their crew members as either 1099s or a part-time W2 employees. Due to the nature of how Event Service companies manage their crew and the complexities involved in dealing with an on-demand workforce, this is understandably a hot topic.
With the IRS and states cracking down on Event companies in order to ensure people are classified properly, it is extremely important to get all of the information you can about the issue to see if your business needs to make any changes. To help you better understand both sides of the issue, we created a Whitepaper breaking down the employee misclassification debate into more detail.
Where do you start?
While we are not aligned with one side of the debate or the other, LASSO has certainly been doing our due diligence for our customers in order to gain a better understanding of what employee classification, or misclassification, can mean for your business.
Why is this important? Estimates of employee misclassification range from 10 to 50% or higher, depending on the industry. Understanding this issue is extremely important as the costs associated with misclassification can quickly spiral out of control if not managed properly. Employers can even face criminal charges and civil penalties.
One of the main areas that should be of focus for Event companies when delving deeper into this debate is the 30-hour a week threshold that is now law after the passing of the Affordable Care Act. Understanding the requirements for businesses in relation to this is fundamental to understanding employee misclassification. In addition, there are many complexities around tax requirements that need to be considered.
It is critical to note that the difference between using 1099s and part-time W2 employees is not based on the duration of employment. In fact, the key determination for employee classification is whether the employer has the right to control the details of how the work is performed. Ultimately, the most important part of the equation is properly classifying each crew member so you can have firm legal footing and continue to grow your business.
Learn more about employee misclassification by downloading our Whitepaper here: https://www.lasso.io/whitepapers/