Tech companies are nervously eyeing proposals in Washington to beef up enforcement and increase fines for violations of a complicated set of rules covering the use of independent contractors.
The issue has special resonance in Silicon Valley, where tens of thousands of engineers and programmers work as independent contractors for companies ranging from startups to some of the area's tech giants.
"It's not uncommon when a company is first starting out to hire contractors to perform various tasks — accounting, financial, human relations, and other kinds of things," said Marina Tsatalis, an employment lawyer with Wilson, Sonsini, Goodrich and Rosati. Tsalalis said she hadn't seen widespread problems with valley employers intentionally misclassifying workers as contractors rather than employees. "But the line is blurry," she added.
Many valley workers prefer the flexibility and control over their work offered by being an independent contractor, but it can also be a way for employers to avoid collecting payroll taxes and other costs associated with having an employee. Contractors don't have the protection of equal opportunity laws, coverage under occupational safety and health regulations or the right to organize.
Sen. John Kerry, D-Mass, and Rep. Jim McDermott, a Seattle Democrat, are sponsoring legislation to give the IRS more power to go after employers and increase fines tenfold, in some cases up to $1
million.
Tuesday, March 02, 2010
Tech companies eye proposals on use of independent contractors
The San Jose Mercury News reports:
