Independent Subcontractors Crackdown in NH not Classification Codes
Some confusion on independent subcontractors versus Workers Comp classification codes occurred due to new New Hampshire rules.
New Hampshire authorities have created a new Web site that allows the public to anonymously report companies believed to have misclassified workers as independent subcontractors. The site is part of an effort by the state’s Task Force for the Misclassification of NH Workers, a group comprised of the Departments of Insurance, Labor, Revenue and Employment Security in the state. The state created the task force last year to crack down on employers who misclassify workers.
We have received a few inquiries from our New Hampshire clients on misclassification due to the above press release that made it in all of the newspapers in the area. Misclassification has to do with independent subcontractors only.
This press release does not concern employers that may have accidentally classified one of their workers in the wrong category – for example – clerical/administrative that should have been classified as manufacturing. That is the function of the insurance carrier’s premium audit process to correct these situations.
The IRS website has a great guide on how to determine if the person working for your company is a truly independent subcontractor, statutory employee, or employee. The most important variable is the amount of control one company has over a contractor. The more controls you have in place for the independent subcontractor, you more likely the person may be an employee.
In the next article, I will re-post the IRS rules for the classification of independent contractors or employees. However, there is a difference between tax classification and workers compensation classification codes
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