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06 Jun

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Michigan Now Using 20-Factor Test to Identify Independent Contactors

June 6, 2013 | By |

Motor Carriers, and other companies, operating in Michigan please take note:  Effective January 2013 Michigan’s Workers’ Compensation Agency Department of Licensing and Regulatory Affairs began using the IRS’s “20-Factor Test” to determine if an individual is an independent contactor or an employee of an organization.

Employers must comply with state and federal employment and tax laws, including withholding certain taxes, contributing toward unemployment and providing workers compensation insurance for employees; requirements which would not apply to independent contractor’s whose services are being hired by the motor carrier.

It is vital that organizations who utilize the services of independent contractor’s familiarize themselves with the “20-Factor Test” and review any concerns with their attorney, accountant and insurance agent to ensure compliance.  States are and will continue to ramp up their efforts to identify those companies who are misclassifying workers, as they now have a greater financial incentive to do so.  When 2014 Fiscal Year budget was passed not only did it include continued funding to help states locate misclassified workers, but additional funds were made available to provide “high performance bonuses” for those states most successful at identifying and prosecuting employers who are misclassifying their employees.

A complete list and description of the “20-Factor Test” can be found here.  The 20 topics discussed include:

1.) Instructions

2.) Training

3.) Integration

4.) Services Rendered Personally

5.) Hiring, Supervising and Paying Assistants

6.) Continuing Relationship

7.) Set Hours of Work

8.) Full Time Required

9.) Doing Work on Employer’s Premises

10.) Order or Sequence Set

11.) Oral or Written Reports

12.) Payment by Hour, Week, Month

13.) Payment of Business and/or Traveling Expenses

14.) Furnishing of Tools and Materials

15.) Significant Investment

16.) Realization of Profit or Loss

17.) Working for More Than One Firm at a Time

18.) Making Service Available to General Public

19.) Right to Discharge

20.) Right to Terminate

Do you have questions concerning the classification of your employees or the handling of independent contractors?  Call us today at (800) 596-TRUCK (8782).  At the Navigator Truck Insurance Agency we work hard to be helpful, accessible and result oriented.

Comments

  1. Thank you for the great information and for providing the link to the actual document!