The misclassification of employees as independent contractors, presents a serious issue for affected employees, employers, and to the economy. Misclassified employees are often denied access to critical benefits and protections such as family and medical leave, overtime, minimum wage and unemployment insurance. Employee misclassification as independent contractors, also generates substantial losses to the Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers compensation funds. In September 2011, the U.S. Department of Labor (DOL) signed a Memorandum of Understanding (MOU) with the Internal Revenue Service. Under this agreement, the agencies will work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws. Additionally, the DOL’s Wage and Hour Division (WHD), Occupational Safety and Health Administration (OSHA), and Employee Benefits Security Administration (EBSA) entered into an agreement with the State of Connecticut’s Department of Labor.They have established the specific and mutual goals of providing clear, and accurate, compliance information to employers, employees; and of sharing resources and conducting coordinated enforcement efforts to reduce employee misclassification. Connecticut employers should be aware that there are different standards between the IRS and CT Department of Labor on the classification of an employee versus an independent contractor.Employers should evaluate their use of independent contractors and realize that misclassification issues are at the top of Federal and State agency enforcement agendas.
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
