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Feds Indicating 1099 Misclassified Worker Crackdown is Coming

On Thursday, April 29th the U.S. Labor Secretary threw down a new gauntlet, putting businesses on notice that quite a few 1099 reportable "gig workers" should be classified as W-2 reportable "employees" who deserve work benefits.

The Department of Labor is widely anticipated to partner with the IRS to put in place policies that have a major impact on U.S. workplace laws and regulations, including vigorous enforcement of occupational safety and health rules, overtime payments and proper administration of employee benefit plans. This follows on the heels of the Labor Department's Wage and Hour Division announcing it was seeking to rescind a rule adopted in January that would have made it easier to classify workers as 1099 reportable independent contractors.

Furthermore, mid and large sized organizations can expect to hear from the Labor Department in the months to come regarding assessments of your policies and procedures surrounding worker wages, sick time, health care and "all of the things that an average employee in America can access." This is all part of a large scale ramping up of enforcement related to 1099 issues. The summer lull in 1099 reporting requirements would be a great time for your organization to begin looking at these issues and making sure you are safe from audit or penalty.