Let’s start with this: Everyone is happy being an independent contractor until they’re not.
What do I mean by that? Right now, the relationship works. The contractor performs, and you pay for the work.
But what happens when things go south? As soon as you decide you no longer need those services, the contractor might stop being your BFF.
A disgruntled former contractor has some options, all of which involve some variation of this story: “Once upon a time, I was misclassified and should have been an employee.” None of the former contractor’s possible next steps are good for you:
- Contractor files for unemployment, claiming he/she should have been deemed an employee.
- Contractor files unfair labor practice charge with NLRB.
- Contractor complains to IRS or state taxing agency.
- Contractor complains to DOL that you didn’t pay minimum wage or overtime.
- Contractor complains to state DOL that you didn’t follow some aspect of state employment law.
Any of these can lead to a full audit or investigation.
Then there’s every disgruntled ex-contractor’s favorite pastime (no, not baseball!) — #6 Contractor hires a lawyer. Or even better (worse), a class action lawyer.
There’s also the spontaneous government audit, sponsored by your friendly neighborhood IRS, DOL, or state taxation or labor department. Audits sometimes begin with a complaint, sometimes not. But they’re always fun. Or not.
So let’s conclude with a song to commemorate the good times going bad. In the immortal words of Dave Mason (We Just Disagree, 1977):
So let’s leave it alone ’cause we can’t see eye to eye
There ain’t no good guy, there ain’t no bad guy
There’s only you and me and we just disagree
Ooh ooh ooh, oh oh oh
That about sums it up: Ooh ooh oh, oh oh.