W-2 EMPLOYEES AND NOT 1099 CONTRACTORS
STAFFING YOUR EVENT….Why working with a staffing company who send w-2 employees to staff your event might be better than using one with 1099 laborers…..
In recent years, with the prevalence of the gig worker economy, you might be tempted to locate a staffing company who will connect you to those gig workers, similar to Uber or Sitter City. However, when it comes to event staffing, that may not be the way to go. Here are some things you should pay attention to when using a staffing company.
THE GOVERNMENT IS CRACKING DOWN ON WORKER MISCLASSIFICATION
New lawsuits are popping up every day highlighting the growing liability of working with independent contractors – and no two companies are more familiar with this recent buzz than rideshare platforms Uber and Lyft. Because drivers on these platforms are technically classified as independent contractors, they’re not protected by overtime or workers’ compensation laws even though they work long days, have no control over their rates, and provide the sole service that the company profits from.
The IRS has a three point test that it has historically looked at to determine if workers are employees or independent contractors: 1) Does the company control or have the right to control what the worker does and how the worker does his or her job? 2) Are the business aspects of the worker’s job controlled by the payer? (These include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) 3) Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business.
Navigating potential liability can be a minefield (Tax Liability, Workplace Injury and Liquor Liability)
First, the risk of misclassification when engaging with independent contractors can leave your business liable for state and federal taxes, social security, disability, unemployment, and more. Secondly, independent contractors are not covered by workers’ compensation and thus can leave you liable to pay any injuries they might incur on the job. Finally, if you’re engaging an independent contractor to serve alcohol at your event without liquor liability insurance, you could be held liable for any damages or injuries that arise because of the sale or service of alcohol.
AN ALTERNATIVE SOLUTION
The truth is, while gig platforms might promise the world, the only thing businesses are guaranteed is a connection with a job seeker – well, and all of the potential liability that goes along with 1099 workers. If the realities above seem like a headache, you have other options.
When working with a staffing provider for your event needs, like companies who provided W-2 employees, you’re protected from all angles. These types of companies provide full workers’ compensation insurance (it’s illegal to employ staff without this insurance), general liability insurance, and host liquor liability insurance. Companies such as these, pay and administer all legally required payroll taxes, including social security, state disability, and unemployment, as well as state and federal taxes on behalf of their staff and clients.