The IRS SS-8 Program allows either a Company or a Worker to request that the IRS evaluate and determine whether the Worker is an employee or an independent contractor for Federal/IRS Purposes. The resulting Determination by the IRS SS-8 Unit is just the SS-8 Unit's "opinion" (not an actual audit!).
In July 2019, a state appeals court, the Pennsylvania Commonwealth Court (hereinafter "Court"), decided that psychological counselors (who provided services to clients) had been properly classified as independent contractors. [The case is Pathways Counseling Services LLC v. Commonwealth of Pennsylvania et al., Case Number 1332 CD 2018.]
Under the Illinois Unemployment Insurance Act (hereinafter "Act"), there are certain kinds of workers (for example, real estate appraisers, direct sellers, certain kinds of newspaper delivery people) who are exempt from employment (i.e., independent contractors) as long as the specific legal requirements are met.
If an individual is found to be an independent contractor under Title VII of the Civil Rights Act of 1964, that individual cannot sue for discrimination under that law because they are not an employee. Only employees can claim legal protection under Title VII. A surgeon recently discovered this legal reality when she sued the hospital for discrimination. She sued because the hospital revoked her medical practice privileges. She claimed to be an employee (and not an independent contractor), and therefore sued the hospital as her employer under Title VII on the basis of her sex, religion and ethnicity.
The IRS uses a Questionnaire called the IRS Form SS-8 (Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding) to determine when a particular "worker" is an independent contractor and when the "worker" is an employee.
Many Illinois trucking companies have independent contractor agreements for owner-operators (to help establish an independent contractor relationship between the Illinois trucking company and the owner-operators who perform services as truck drivers for the trucking company).
Here are some of the most news-worthy developments in labor law for the first months of 2019.
Applying the very strict "ABC test" defining independent contractor status under Indiana's unemployment insurance law, the Indiana Supreme Court ruled that a company (Q.D.-A.) did not misclassify its driver as an independent contractor. Q.D.-A. was found not to be the employer of the driver in question. Therefore, Q.D.-A. did not owe the Indiana Department of Workforce Development any back unemployment insurance taxes.
ROLE OF STATE LEGISLATURE: Surprising to many, state legislatures solely determine the legal test that is used in a particular state for evaluating whether a "worker" in question is an independent contractor or an employee (for purposes of obtaining state unemployment insurance benefits).
Clients are increasingly aware of the growing number of class action lawsuits across the United States. What should the worried company owner do? The logical response is to have independent contractors (or employees) sign a contract under which they agree to mandatory arbitration of all disputes, claims or causes of action arising out of or related to the independent contractor (or employment) relationship with the Company.