Albany’s 1099 Services Address Concerns
<p><strong>Mountain View, Calif. — May 1</strong><br />Legal blows to corporate giants Microsoft, HP and FedEx have brought 1099 compliance issues into sharp focus. </p><p>The IRS also has indicated it will step up investigations and not just into high-profile companies.<br /><br />As companies increase their use of contract labor, they face new risks. Albany’s 1099 expertise is a welcome ally, helping companies protect themselves from misclassification of workers. <br /><br />Misclassification audits by the IRS are common in markets known for high use of contractors such as technology. Audits by state agencies are even more likely. </p><p>They often are triggered when contract workers apply for unemployment benefits after their assignments end or by workers compensation claims for job-related injuries. <br /><br />With its recent acquisition of Silicon Valley’s eWork Services, Albany boasts a 20-year record of 1099 compliance and contractor payrolling services for large and midsize companies. </p><p>Albany’s expertise is a relief to companies hearing the warning shots of Microsoft, HP and others.<br /><br />Both federal and state-specific 1099 laws govern the relationship between the companies and contract workers. </p><p>Employers unintentionally can violate these laws through innocent actions and policies, often resulting in huge penalties. The examples are numerous. <br /><br />Microsoft was sued by misclassified workers for denial of benefits, including stock options. The company is appealing a $97 million settlement. </p><p>FedEx drivers in a class-action suit claimed, although they were considered contractors, they were still primarily under FedEx’s control. FedEx could potentially owe $1 billion. </p><p>HP contractors alleged they were forced to work overtime but were not compensated. The class action suit involving 500 contractors could cost HP $20 million in damages. <br /><br />“Simple actions can make companies vulnerable to 1099 misclassifications,” said Jason Posel, Albany senior vice president. “Requiring a contractor to use a company e-mail address or to work full-time at the company facility can indicate 1099 classification noncompliance. Misclassifying workers as independent contractors means the IRS is not receiving payroll taxes, a situation they’ll not ignore.” <br /><br />Companies still might not be paying attention. Senior executives surveyed by research firm Veritude ranked worker classification almost last among their workplace concerns. </p><p>Even businesses with a small number of contractors determined as misclassified can find consequences economically devastating. They must pay the IRS all back taxes owed, with interest, plus a penalty of 12 percent to 35 percent of the tax bill.<br /><br />A quick look at Albany’s Compliance Calculator offers HR professionals and executives an insight into their potential penalties from misclassifications risks.</p><p> Research shows that on average, 62 percent of consultants are misclassified. <br /><br />Albany has a record of successfully auditing the classification of its clients’ contract staff. For those who do not qualify for 1099 payment, Albany’s Employer of Record service ensures compliance with the IRS/state guidelines and avoids the risk of contract staff claiming benefits from their clients. </p><p>Albany hires the workers as its own W2 employees, processing payroll, paying the correct taxes and providing benefits and covering the workers through its own insurance and workers comp.<br /><br />Unlike staffing companies, Albany does not source contract workers but lets clients leverage their own referral networks and HR departments to find talent. Correspondingly, Albany charges a fraction of staffing company fees. </p><p>Albany also offers expertise in workforce management globally, helping companies with HR issues and compliance in whichever country they are doing business.</p>
