The latest “lawsuit du jour” is state governments
challenging companies that misclassify employees as
independent contractors.

But how does a state even know to challenge an employer
about a misclassified independent contractor (IC)?  Well,
in the majority of cases, the states learn about the
situation from former ICs who seek to recover unemployment
compensation (UC) benefits or workers compensation
benefits.

That’s right, in tough economic times, former ICs who were
happy not to have taxes withheld from their pays are
claiming that they have been victimized by employers who
misclassified them.

HR CONTRARIAN POINTER: Do it right the first time – it’s
not worth the aggravation or distraction from your
business.

I have met many employers who tell me that a worker is an
IC as I complete my HR Audit on the company.  Then, as I
talk them through the IRS guidelines for ICs, the
employers sheepishly agree that there are some grey areas.

The states and the IRS don’t see grey areas.  They see
black and white.  As the federal government and states
struggle with increasing unemployment and declining tax
revenue, they will become more aggressive in making sure
that they receive the taxes that they are due.

Below is a link from a Texas state government agency known
as the Texas Workforce Commission.  It offers some easy to
follow guidelines for determining who is an employee and
who is an IC:
http://www.twc.state.tx.us/news/efte/appx_d_irs_ic_test.html

Whenever I speak with a client about a problem employee,
one of my favorite questions is, “Was the person dead when
you hired him, or did you kill him?”

When it comes to employee performance, there are 2
scenarios that occur about 95% of the time which are
controllable and 1 scenario that occurs about 5% of the
time which is uncontrollable:
1. Inadequate Hiring System – Controllable
2. Organizational Culture Deficiencies – Controllable
3. Employee Personal Problems – Uncontrollable.

HR CONTRARIAN POINTER: Work on the systems that you can
control and setup a performance monitoring system to
identify the uncontrollable as soon as it occurs.

A company’s first line of defense to getting great
employees is the hiring process.  If you are interested in
a hiring process that improves your hiring success to over
80%, then download the first 5 chapters of my book
“Secrets To Hiring Success” at
http://www.hrcontrarian.com/white_papers/

The second line of defense is the organizational culture
that a company establishes via its Employment Branding
Process.  View my recommendations for a performance-driven
Employment Branding Process at
http://www.hrcontrarian.com/philosophy/

Finally, there are numerous personal issues that can
negatively affect an employee’s performance.  Management
cannot control the external issues.  However, management
can setup a performance monitoring system that can detect
deviations before they get out of hand.  View my Process
Evaluation Program for easily detecting and correcting
deviations in performance.
http://www.hrcontrarian.com/processevaluation/