For Employers

Independent Contractor Engagement 

Misclassification of a company’s 1099 Independent Contractor (1099 IC) workforce can be a tremendous economic burden. Audits by the IRS are skyrocketing, with 30% of all audits related to worker classification. Atrium offers a thorough, proven IC evaluation solution that will protect your company from audits and co-employment lawsuits. 

Risk Factors Associated with Misclassified Independent Contractors: 

• One in three companies fail a worker classification audit; burden of proof is on the client/company (Emergent, 2011) 
• 46% of 1099 ICs reviewed are determined to be misclassified (Emergent, 2011) 
• Class action lawsuits by groups of 1099 ICs requesting employee status 
• Defense takes years and invaluable internal resources 
• Financial consequences: fines, penalties, interest payments, back taxes, legal fees 
• Benefit Inclusion — Reclassified 1099 ICs must be treated as employees for benefits 

Factors That Trigger an Audit? 

• Unemployment or Workers’ Compensation claims 
• A W-2 and 1099 issued for the same worker by the same company in the same year 
• All tax audits by the government require a subsequent 1099 audit 
• IRS Whistleblower Award Program 

Solution: 

• Implement a best practice third party IC evaluation program 
• Dissuade auditors from engaging and, if necessary, defeat them with automated, archived defense files created on every evaluated 1099 IC 

Return On Investment: 

An outside IC evaluation program will allow your company to recoup hard-dollar spend from the following: 

• Reduced time in manual document collection, worker classification determination and responding to audits 
• Cost avoidance related to co-employment, potential legal fees, penalties and back taxes resulting from tax audits