How to Avoid Regulatory Fire in the Gig Economy

Pulling a fire alarm

 

From Entrepreneur, Peter Limone offers his recommendations to entrepreneurs on how to avoid getting into trouble with regulatory agencies. Peter writes:

The following steps can shield your company from unexpected regulatory heat:

1. Classify with care.

Just because you don’t control a worker’s hours and projects doesn’t automatically make that person an independent contractor. In Pennsylvania, for example, an online expert network came under fire for misclassifying a mapping and navigation consultant. Simply because the worker was free to pursue other clients, the presiding court found, didn’t necessarily mean he “customarily engaged in other business.” Under Pennsylvania law, that worker’s economic dependence on the online network made him a misclassified employee.

Related: Think Twice Because Your Freelancer Might Legally Be an Employee

How can you protect yourself from similar mistakes? Thoroughly vet all potential independent contractors to ensure they qualify. The IRS provides a 20-point test for this very purpose. Do they have business cards and their own websites? Have they recently done work for other clients? When in doubt, consult an employment law expert or find an HR provider to vet 1099 contractors for you.

2. Revisit workplace conduct policies.

Whether you have one employee or 1,000, you need equal employment opportunity and anti-harassment policies. Proactively seek samples of lawyer-reviewed policies from your HR provider. Provide them to all W-2 employees, including temporary hires. Conduct in-person trainings for all new hires and whenever policies are updated.

Think you can skirt the issue because you’re small? So did GitHub, which faced a sexual harassment investigation because it didn’t have the right policies in place. Although founded in 2008, GitHub waited until 2014, when it had more than 200 employees, to hire a human resources executive.

3. Follow I-9 guidelines.

The Immigration Reform and Control Act of 1986 requires verification of all new hires — although not independent or statement-of-work contractors — via a two-section I-9 form. This form must be completed accurately within a new employee’s first three days of work. Companies with missing or incomplete I-9 paperwork can face stiff penalties, regardless of whether they employ foreign citizens.

Before U.S. Immigrations and Customs Enforcement personnel come calling, consider partnering with an employer of record (EORs). EORs assume I-9 responsibilities (and any penalties levied for noncompliance) by acting as a “man in the middle” employer for temporary workers. If you decide to go it alone, U.S. Citizenship and Immigration Services offers an excellent webinar series on I-9 requirements.

Read the full story at  How to Avoid Regulatory Fire in the Gig Economy

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