You own and operate a commercial flooring supply company. You have always hired subcontractors to install any flooring sold. These installers supply their own tools, trucks and carry their own business cards. Most have a crew and work for other flooring supply companies. For each installation job, you instruct the installers where to install the flooring, generally when to arrive and afterwards, check the work for consistency with the order. You have always considered the installers to be independent contractors. However, you just received an audit notice letter from a state agency seeking to confirm this classification.

This letter will not be the last. As described below, state and federal agencies are going out of their way to reclassify independent contractors as employees and levying fines, penalties, and interest in their wake. The federal and state governments’ reasoning is as follows...