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Independent contractors — Virginia

There are advantages and disadvantages to employers using independent contractors instead of or along with, employees. Most labor and employment laws only regulate the employer-employee relationship and therefore do not apply to independent contractors. Similarly, other laws, such as tax laws and social security laws, also make distinctions between employees and independent contractors. Because employers are required to pay certain federal, state and local taxes on behalf of their employees, the financial benefits of having a large independent contractor workforce may be significant. This financial incentive, however, must be balanced against the substantial risks associated with misclassifying an employee as an independent contractor. It can be extremely difficult to determine what qualifies someone as an independent contractor and the penalties for misclassification can be costly. 

Adding to the confusion is a definite trend for courts as well as federal and state agencies to classify independent contractors as employees. In these situations, employers become exposed to unanticipated liabilities and penalties. Consequently, employers should consider consulting with legal counsel whenever engaging someone to work as an independent contractor. For those employers who use large numbers of independent contractors, it has become increasingly important to consider the potential ramifications of misclassifying...


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