The Drifters wanted listeners to save the last dance for them. Grand Funk Railroad wanted to save the land (album: E Pluribus Funk!!!). The Sex Pistols wanted to save the queen. Or they wanted God to do it for them. Lazy Sex Pistols.
But what about saving money? Not enough action there. A recent report from the Economic Policy Institute found that the median (50th percentile) working-age family had just $5,000 in retirement savings. (Warning: It’s boring Boring BORING, but click here if you dare.)
Workers classified as employees can get a nudge from their employers to save through 401(k) match programs or other incentive plans. Independent contractors, though, don’t have the same opportunity.
Last week, a Congressional Committee (HELP) heard testimony on the savings crisis among gig economy workers. Participants urged the creation of plans that would allow independent contractors to join organized retirement savings programs.
Some states, like Washington, have experimented with programs designed to help gig workers save, but nothing appears to be on the Congressional horizon.
Why does this matter for businesses? Because one of the many areas of exposure for a business that misclassifies workers as independent contractors is that the workers were denied employee benefits, such as a 401(k) match, employee stock ownership, stock options, or other financial rewards that companies offer its employees (but not its contractors). If your contractor was misclassified and is really an employee, the worker could be owed all of the economic benefits you’ve been providing to your employees.
Businesses evaluating their exposure to independent contractor misclassification claims should remember the potential damages that can stem from failing to provide benefits to workers who might turn out to be employees. (Hint: Do you have a spare $97 million?)
Making sure you have carefully classified your independent contractors may end up saving your business big headaches and lots of cash.
For more information on independent contractor issues and other labor and employment developments to watch in 2018, join me in Los Angeles on Feb. 27 or Cincinnati on March 28 for the 2018 BakerHostetler Master Class on Labor Relations and Employment Law: A Time for Change. Attendance is complimentary, but advance registration is required. Please email me if you plan to attend, email@example.com, and list my name in your RSVP so I can be sure to look for you.
© 2018 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.