Does Employee Class Affect Orlando Business Insurance?
Employee misclassification is a growing problem among American businesses, and many employers don’t understand the affects misclassification can have on their business operations and business insurance Orlando. Lawmakers and regulators are responding with increased scrutiny and regulations impacting the employment process. This issue has become increasingly apparent through the implementation of the Affordable Care Act (ACA) as some employers attempt to evade providing their employees with healthcare coverage by wrongfully classifying workers as independent contractors, temp workers and other exempt employees. Others are simply unaware of how to properly classify their employees and that not all temp or contracted workers do not fall under the common law employee standards.
In reality both independent contractors and temporary workers can be considered common law employees depending on the circumstances, which means that businesses that work with such individuals must include these workers in their total employee count and factor them into their ACA calculation. Not doing so could expose Orlando employers to hefty fines, audits and lengthy investigations.
According to the IRS, American employers incorrectly classify millions of workers as independent contractors. The IRS considers worker misclassification one of the major causes of the tax gap, evasion and in some cases fraud. Recently the agency has been cracking down on employee misclassification in in an attempt to closely monitor companies to ensure compliance with applicable regulations. The U.S. Department of Labor recently pledged to increase its collaboration with the IRS to regulate and penalize employers for errors in their worker classification practices.
Why is employee misclassification such a problem?
According to experts, misclassification results in billions of dollars in taxes lost each year. It also creates complications with enforcing ACA compliance, protecting workers rights and other legal challenges. Employee misclassification can also cause problems for Orlando businesses as well. A mid-sized company with 250 full-time employees would have to pay an annual penalty of $340,000 in 2015 if they are found to have wrongfully classified their employees. These penalties increase with multiple years of non-compliance, which would mean the same firm would face a penalty of $440,000 the following year. Furthermore, misclassification can impact your worker’s compensation and liability needs while leaving employers under covered or lacking in specific areas. It can also leave Orlando employers exposed to employment practices liability lawsuits and losses.
As regulatory agencies at all levels increase their scrutiny of business and employment practices it is crucial to make sure that your operation is in full ACA and employment policy compliance by properly classifying workers and complying with all regulations to avoid legal and regulatory complications.
At Newman Crane, we understand the common and nuanced risks that Orlando business owners face. That’s why we proudly offer a complete suite of Orlando business insurance solutions to help business owners navigate the hazards of operation. We can help ensure that your operation is protected from many common and specialty claims and liability exposures, from Workers Comp and Errors/ Omissions to Employment Practices Liability exposures. Give our Orlando business insurance specialists a call today at (407) 859-3691 to learn more about all our offerings and the specialty industries we serve.