January 17, 2012 at 12:46 PM

Independent Contractor Status

"I’m concerned by the recent crackdowns on the independent contracting industry"

By Polly White

Santa Fe Business Musings

Polly White is a local business owner, active community member and astronomy geek.

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As a small business owner who helps other small businesses, I rely on independent contractors.  I’m concerned by the recent crackdowns on the independent contracting industry. Independent contractors are hard-working individuals who are vital to Santa Fe’s economy. Small local businesses, even government agencies, rely on independent contractors to fill niche positions and get work done on an as-needed basis.

Unfortunately, a patchwork of federal and state laws governing independent contracting are often conflicting and confusing. The Department of Labor and the IRS announced they have signed agreements with nine states to go after businesses that “misclassify” workers as independent contractors. It appears the intention is to protect workers – ensuring minimum wages and overtime pay – but mostly it’s an effort to bring in new payroll-related tax revenues from small businesses. I would much rather see the additional revenue be generated from large corporations, (that aren’t so much affected by this) and the wealthiest individuals through personal income taxes.

We relied on the previous criteria of what is an employee and what is an independent contractor when we set up our business models. If these classifications are altered, many businesses could find themselves on the wrong side of the rules and owing lots of money in employee-related taxes. With so many people out of work, crackdowns on employers and increased regulations on independent contractors is not the direction I would like to see us moving in. Full-time employee positions are many times generated from the growth started by an independent contractor. Working with independent contractors lowers costs and improves productivity, which helps keep companies like mine competitive. Don’t punish small business owners for starting with those independent contractors. Their work is vital and so is their status.

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