From JDSupra, David Blair, Xenia Garofalo, Anna Hargett, Benje Selan, and Wes Sheumaker provide an excellent overview of the proposed regulations on the clean energy prevailing wage and apprenticeship requirements instituted under the Inflation Reduction Act of 2022 (IRA). A key definition that is sometimes overlooked is the definition of employed which includes workers “regardless of wehther the indivudal would be characterized as an employee or an independent contractor for other tax purposes.” The Inflation Reduction Act, as well as other federal contracting leglislation, does not distinguish between employees and independent contractors when it comes to compensation and benefits. In these proposed regulations, the definition of “Employed” is:
“Employed” refers to a the performance of duties by a laborer or mechanic for the taxpayer, contractor, or subcontractor, regardless of whether the individual would be characterized as an employee or an independent contractor for other tax purposes. This definition is unique to the Prevailing Wage Requirements and is not relevant in the determination of whether an individual is an employee for Federal tax purposes.
Companies engaging with the federal government should carefully review whether their obliglations to workers apply to both employees and independent contractors.