An important topic applying to employers nationwide, including churches, is that of correctly classifying workers. The misclassification of workers can potentially result in substantial fines, penalties, and back wages owed by employers. New US Department of Labor Guidance on correctly classifying Independent Contractors is effective today, March 11, 2024.
Workers are either Employees (W-2 part-time or full-time) or Independent Contractors (1099). Independent Contractors are not employees but rather are in business for themselves. Their services are offered to employers on a fee basis for a specified period of time. As Independent Contractors they have the opportunity for profit or loss, as again they are in business for themselves.
A common mistake by employers is incorrectly classifying some workers as Independent Contractors (1099) vs employees. The core focus of the clarification is on economic dependence. Independent Contractor’s providing services to only one employer are in reality more likely correctly classified as W-2 employees. The new DOL guidance is intended to help reduce the risk of misclassification.
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Mark Bradley
BMA Financial - Insurance Services
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