Friday, May 20, 2016

1099 vs W2: The Employer Perspective

From an employer's perspective, it's often preferable to hire contractors instead of employees. For one thing, they won't have to pay for all the benefits they would offer employees, such as health insurance and perhaps life insurance, not to mention bonuses, stock options, 401(k) plan contributions, and so on. It can also be much easier to terminate a relationship with a contractor than with an employee.

The issue has increasingly been in the news, as many companies are increasing their proportion of contractors in order to spend less on staffing. Employers generally make these choices well within the law, but some have been accused of classifying workers who should be considered employees as contractors instead.

The IRS has issued guidelines on the matter, saying, "If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees." Meanwhile, "If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors." The distinction is important because there are penalties for misclassification.

But there is an answer. 

As an employer, you can avoid penalties for misclassification. Capstone Contract Solutions is a unique contract firm for insurance professionals - we provide insurance professionals on demand.  We help our clients fill interim needs in specialized disciplines while employing the same quality recruiting techniques utilized in our permanent search process. You avoid the hassles of misclassification as well as other related things such as payroll, etc. 

Contract insurance professionals can be a cost effective solution to your business’ critical staffing needs.  Faced with the necessity of project-specific labor services, many companies are finding contract services an effective means of alleviating short and long term staffing needs. We can help.


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