If your company manages freelancers or contractors, you’re probably already aware of worker classification laws here in the US. The laws are still changing, and it can be a complex issue for employers to manage — particularly if you manage workers in multiple states. And the penalties for misclassifying workers can be extremely steep.
Understanding the line between who is an independent contractor and who is an employee can be really difficult for many employers. The more contractors you have working for your business, the more challenging it will feel. Especially if your teams manage them manually, using outdated tools like spreadsheets and inefficient processes. If they are, they’re probably spending large amounts of time going back and forth with legal and HR to make sure everyone is on the same page. And this creates even more room for error and miscommunication in terms of compliance.
But what if there was a tool that could do all of this for you, and you didn’t have to worry about worker classification at all? Worksome Classify is our new worker classification tool that automates the admin work, automatically classifies your workers, and indemnifies the risk for penalties, interest, and taxes. You can rest assured that you’re operating in compliance with state and federal regulations.
Faster hiring and onboarding
For many companies looking to hire independent contractors, time is of the essence. Whether it’s a project you’re trying to get off the ground or covering for someone who has just left the business, generally, the sooner the spot can be filled, the better. But worker classification is typically a complex process that can stretch into days or weeks. That leaves managers in a bind when they need support quickly. And rushing the process could result in getting it wrong, opening them up to liability and potential fines down the line. So they end up waiting for the talent they need, even when waiting isn’t really an option.
Because classification is integrated into the Worksome platform, workers can be classified in minutes instead of days or weeks, and it’s done as a part of the onboarding process. This makes it different from other classification tools because many outsource the actual classification process, sending it to an outside legal counsel and getting an unclear legal opinion. Relying on third-party classification also can create a lot of back and forth trying to communicate worker information correctly, classify them, and verify that it was done correctly.
Using a tool that owns the classification process means there’s never a holdup on classification. And our system improves communication between all parties. Both of these help with speed, so you can get your contractor started on your project as soon as possible.
Lower costs and reduce inefficiency
The cost of hiring workers largely depends on your internal processes and how efficient or inefficient they are. If there’s a lot of back and forth between your different departments to sort out hiring, contracting, and billing, the time spent per contract on admin work can really add up when you look at it by month or year. Correctly aligning the contract and classification is important and, because of this, it can often take a lot of time to make sure it’s done correctly.
Because Worksome consolidates classification into one system — and because you can easily classify your workers in minutes, not weeks — it eliminates the time and money wasted on the back and forth communication. And that time translates into dollars for every minute your teams spend communicating with each other or with a third party handling classification.
With Worksome Classify, you can cut the time and expense in hiring your workers and lower the risks involved in properly classifying them, enabling them to focus on more strategic work that can better your business.
The elimination of risk
Risk is the most important factor for many companies. Misclassifying workers can lead to penalties from the IRS or the DOL in addition to needing to pay back-taxes, interest, and penalties for misclassified workers. You also need to worry about state-level penalties, where the most misclassification risk is.
Another area that sets Worksome Classify apart from other classification tools is that Worksome stands behind its classification process. We will indemnify our clients for taxes, interest, and penalties for companies using Worksome Classify who are later penalized (please see our Terms of Use for details).
Worksome Classify significantly reduces the risk of hefty fines and penalties off you and gives you the peace of mind that your contingent teams are compliant with worker laws and regulations. Our tool also makes the worker classification process easy to understand, gives your company confidence in hiring, and removes some of the confusion around worker classification.
Peace of mind and a more efficient freelance workforce
Worksome Classify has set a new standard for classifying workers in the market, reducing both the time and cost for you by eliminating back and forth and bottlenecks. It also makes the whole classification process easier for your different teams, instead of being something that your legal teams need to constantly explain to the other teams. Best of all, of course, is that it reduces the risk for you if workers are misclassified.
Worker classification is also just one of the many benefits of using an FMS. Your HR, legal, finance, and procurement teams would also benefit heavily from implementing a system like Worksome. Ready to let us do the heavy lifting for your worker classification and freelance management?