The Obama Administration announced today that as part of its 2010 budget, the federal government will begin a large scale crackdown on companies that misclassify 1099 / Independent Contractors.
According to expert sources, many companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors to avoid paying employer taxes and offering employee benefits.
As a solution to 1099 compliance, many companies are utilizing Uniforce’sQuick Start Staffing as a third party payroll service. Since Uniforce becomes the (W-2) “Employer of Record” for the workers that were incorrectly classified as independent contractors, companies are IRS compliant and can now retain the workers with no payroll tax, insurance, or benefits costs.
A recent New York Time article discusses this issue in length.