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Employee misclassification is a serious problem to employees, employers, and the economy in general. The misclassified workers are always denied crucial benefits and protection, for instance, unemployment insurance, overtime, and medical leave which is their right. Nevertheless, employee misclassification results in losses for various sectors that are Social Security, Treasury, and Medicare funds. The employers are also not left out in the consequences of employee misclassification. Labour unions may organize the employees against the employer, hence creating a standoff between the workers and the employers. This paper seeks to analyze three options available for the business to accomplish protecting itself from misclassification of workers as stated in the Pepper Podcast.

As suggested in the Podcast, one of the options is to restructure the independent contractor’s relationship with the business to comply with the federal laws and avoid any risk that may result from misclassification allegations. The employers should let the independent contractors to have control over their work. The company control over the independent contractors should be minimized to avoid claims by the contractors that they are employees of the organization. The independent contractors should be allowed to work for other company less it is assumed that they are permanent employees.

Another great option as highlighted in the Podcast is the use of IC diagnostic. After the company has determined the way to restructure the relations between them and the independent contractors, it will be beneficial to carry out an IC diagnostic. IC diagnostic is a way of finding out whether the business position will pass IC tests set by laws. The 48 factors are used to indicate employee or Independent Contractors status. The company compliance with the set applicable laws should also be measured on IC Compliance Scale.

The Podcast suggest Reclassification of workers if the IC diagnostic indicates that the company will not pass the tests. Reclassification can either be conducted by the government or voluntarily. Most companies receive notices from unemployment agencies and state workers compensation agencies to indicate whether their workers are independent contractors or employees. The government agencies may force the company to reclassify and make order to the business to pay back taxes and other contributions.

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