Article today in the New York Times about the government crackdown on proper classification of employees. Why would an employer purposely classify an employee as a contractor, or what would be the possible benefits? The Times says:

Companies that pass off employees as independent contractors avoid paying Social Security, Medicare and unemployment insurance taxes for those workers. Companies do not withhold income taxes from contractors’ paychecks, and several studies have indicated that, on average, misclassified independent workers do not report 30 percent of their income.

These short term benefits can be tempting, but the penalties can be stiff,

California’s attorney general, Jerry Brown, is seeking $4.3 million from a construction firm he accused of misclassifying employees. Last April, he won a $13 million judgment when a court ruled that two companies had misclassified 300 janitors, cheated the state out of payroll taxes and not paid minimum wage and overtime.

And, the Obama administration has decided to aggressively pursue this issue,

The Obama administration plans to expand investigations by hiring 100 more enforcement personnel. The I.R.S. has begun auditing 6,000 companies to see whether they are in compliance with the law.

Call center employees, working in a call center, at a desk, making calls, under supervision are almost surely employees and not independant contractors.  That being said, certain situations may be more difficult to determine.  The IRS has a 20-question test to determine classification that is worth reviewing if there are any questions.

Bottom line, make sure you consult with a knowledgeable employment lawyer or HR professional in order to mitigate risk for the company and give the employees the benefits of employment they deserve.

Related articles that may be of interest

• U.S. Cracks Down on ‘Contractors’ as a Tax Dodge (nytimes.com)
• IRS, states crack down on independent worker abuse (sfgate.com)
• IRS, states crack down on independent worker abuse (seattletimes.nwsource.com)
• IRS, States Crack Down on Independent Worker Abuse (abcnews.go.com)