Independent Contractor Compliance

In Washington State, companies are relying increasingly on independent contractors to avoid the costs, taxes, and hassles of hiring employees. The practice, however, carries significant risks.

State and federal law set strict guidelines for hiring independent contractors, and enforcement agencies (L&I, ESD, and IRS) aggressively audit for compliance. Businesses that misclassify workers are assessed substantial back taxes and penalties, and their contractors are immediately reclassified as employees. For many businesses, an audit can be devastating.

Mercer Law PLLC counsels businesses on independent contractor issues, and represents businesses in L&I audits, ESD audits, IRS audits and appeals.

What are my risks with independent contractors?

“One of the most common mistakes businesses make … is misclassifying their employees as independent contractors.”

–Washington State Employment Security Department

Ignoring or otherwise failing to address independent contractor law compliance issues carries real and significant risks. First, it increases the likelihood that your business will be targeted for an L&I audit, ESD audit, or IRS audit. Second, it subjects your business, needlessly, to devastating fines.

7 Reasons Businesses are Selected/Targeted for Audits

While it may be tempting to ignore independent contractor risks, and to hope (with eyes closed and fingers crossed) that your business won’t be selected for an audit, note that your business could be selected or targeted for an audit for a variety of reasons:

Mercer Law PLLC can help

Mercer Law PLLC is one of the few firms, if not the only firm, in Washington that focuses almost exclusively on independent contractor law matters. As a result our firm has deep and extensive experience counseling businesses on every aspect of working with independent contractors:

Independent Contractor vs. Employee

If your business is deciding whether to hire independent contractors or employees, we’ve helped many businesses weigh the proper considerations to make this decision. Where there are no clear choices, we’ve helped businesses safely and compliantly navigate gray areas of worker classification. Very often, this is one of the more financially consequential decisions a business can make.

Representation during L&I and ESD audits

If your business has been selected for an employment tax audit by Department of Labor and Industries (L&I), Employment Security Department (ESD), Internal Revenue Service (IRS), we have assisted hundreds of businesses through these audits. Our clients have the confidence of knowing they have experienced counsel guiding them through the process, and in giving them the best chance of getting the best possible result.

Appeal and reduction of audit fines

If your business has been through an audit and has received an assessment, whether the assessment is $20,000 or $200,000 or $800,000, we’ve represented clients in many appeals, often securing tens or hundreds of thousand dollars in reductions during the appeal process.

Help with future compliance

If you’ve been through an audit or appeal and want to avoid the hassle and expense of tangling with the government and coming up on the losing end, we’ve assisted many businesses in taking lessons learned and improving their compliance for the future, or where needed, restructuring their business to better ensure future compliance. 

Experience across all industries

There probably isn’t an industry where we have not provided our services. Representative clients/industries include: general contractors (new construction, remodeling, painting, drywall, carpentry, roofing, etc.); hospitals and clinics; group therapy practices; interpreter and translation agencies; tutoring agencies; orchestras and theater companies; janitorial franchises; landscaping services; logging companies; delivery/messenger services; restaurants; barber shops and salons; trucking companies; contractor referral companies; HR consulting services; law firms; etc. So no matter your industry, you can rest assured that our firm almost certainly has had experience representing businesses like yours.

See Services for more information on how we can help.