The United States Senate has introduced the Fair Playing Field Act of 2012. This legislation would prevent employers from being able to use the federal “safe harbor” provision which permits employers to classify employees as independent contractors for tax purposes regardless of the fact that the employer may be required to withhold appropriate taxes and pay employment taxes for the independent contractor. The current “safe harbor” provision protects employers’ classification of employees if the classification was based on a published ruling or judicial precedent, a practice in the industry, or a past IRS audit. The legislation would increase the penalties to employers for misclassification and require them to inform the independent contractors of their rights and ability to request a determination from the IRS.
Please contact our NJ Employment Lawyers if you have any questions regarding the Fair Playing Field Act of 2012.