Remote Worker Compliance — Can You Still Engage With 1099 Workers?

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As businesses begin to reopen, demand for additional technical workers may arise – especially in critical engineering areas. It is tempting to add consultants to perform services and have them work remotely similar to what internal staff has been doing for the past few months. This can be a slippery slope given California’s AB-5 law – in effect since January 1, 2020.

Even if companies engage consulting professionals who typically operate as business entities, have business licenses and work in their own offices using their own computers and equipment, the relationship may not be in compliance with the AB-5 law.

It has been common practice for many years for companies to engage specialized technical experts in software engineering, mechanical engineering, electrical engineering…etc. to supplement their internal staff. The relationship between client and consultant was simple and effective. With the new law, things are no longer simple.

Under the AB-5 Law, the “The ABC Test” must be met in order to classify a worker as an independent 1099 entity:

A. The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.

B. The worker performs work that is outside the usual course of the hiring entity’s business. (This is the trickiest one – if engineering is core to your business and engineering consultants are engaged, you fail this test.)

C. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

If any of these factors are not met, your company can be charged with misclassifying employees and incur fees and penalties.

One way to stay in compliance is to use “employee leasing”, a service provided by SoloPoint Solutions. Consultants and project-based workers will be on-boarded as regular W-2 contract employees by SoloPoint, and most importantly, removing you, the client, from the equation of being an employer.

SoloPoint’s Employee Leasing program offers:

W-2 ONBOARDING AND EMPLOYMENT COMPLIANCE:

  • Tax withholding and reporting (State and Federal W4’s)
  • Work authorization and verification (I-9)
  • Worker’s compensation insurance
  • State and Federal Unemployment Insurance (UI) Taxes
  • State Disability Insurance (SDI) Tax
  • Federal, State, and Local County Background Checks
  • Drug Screen
  • Education and Employment Verification

WORKERS PAY AND BENEFITS COMPLIANCE:

  • State and Federal hourly, overtime, and double-time pay
  • Medical, Dental and Vision Insurance
  • Sick Leave

ENGINEERING EQUIPMENT AND SOFTWARE FOR REMOTE WORK:

  • CAD (SolidWorks, ProE, Creo, AutoCAD, PADS)
  • Dell and Lenovo Workstations

In our road to economic recovery, we understand that businesses need to focus on their core services and in building revenue. The ability to access flexible resources while staying in compliance with complex labor laws may be a critical factor. This is where SoloPoint Solutions can help.

To learn about our Employee Leasing Program, contact us today:

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