Know the rules on worker classification. The stakes have always been high …lost taxes for federal and state governments and fewer benefits for workers who are improperly treated as contractors. But health reform magnifies their importance.
Firms with 100 or more full-time employees in 2015 must offer a reasonable level of affordable insurance to their full-timers or large penalties will be due. Businesses with 50 to 99 full-time employees have until 2016 to comply with the pay-or-play rules. Reclassified workers can put a small firm over the limit of allowable full-timers and trigger the employer mandate to offer health insurance. The Service has historically used a 20-factor test in classifying workers as independent contractors or employees, although not all factors apply in every case.
For audit purposes, IRS has boiled down the 20 factors into three categories: First is the behavioral test, which focuses on whether the company controls or has the right to control what the worker does and how he or she performs the work. Key factors for employee status include the type and degree of instructions given about when, where and how to do the job, plus detailed evaluation criteria and training