Independent contractors — Pennsylvania
Proper classification of independent contractors
There are both advantages and disadvantages to the use of independent contractors. Because employers are required to pay certain fringe benefits and payroll taxes with respect to their employees, the financial benefits of having a large independent contractor workforce may be significant. However, it can be also be extremely burdensome for employers to keep on top of exactly what qualifies someone as an independent contractor, and the penalties for misclassification can be costly. Independent contractor classification issues have become more important in recent years with the development of the "gig" economy, and the provision of various services through independent contractors.
Proper classification has also taken on added importance in Pennsylvania since August 4, 2016, when Pennsylvania became the 32nd state to partner with the United States Department of Labor in efforts to crack down on worker misclassifications. According to a memorandum of understanding between the DOL and Pennsylvania authorities, the agencies will share data and coordinate their enforcement efforts. Employers would be prudent to conduct their own self-audits to be sure they have a legitimate basis for their classification decisions.
For an individual, being classified...
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