Practice English Speaking&Listening with: How You Avoid #MisclassificationRisks With #AcumenInternational

We eliminate completely employment risks for your company. And you mentioned a very good

point, say: do I have the risks of misclassification for example? Yes. If you would have a direct

contract with this individual, if he would work for you as an independent sales rep,

I mean IRS may come to you, audit what you do and find out that although you have a contract

with him, although you have a contractual agreement with him, actually he is your employee.

Why? Why is he your employee? Because you control his work, you provide the tools, you

manage him and you can influence the outcome of his work, ok? So all these things would

show IRS that you need to employ that person. Then you have huge misclassification risks

because if for example you have a contract with that individual for several years, it

would mean that in retrospect they can go backwards and they can recalculate it. So

you would need to pay all the taxes for that period and you would need to pay all the holidays

for that period. And we have that case that in Colombia one lady was working as an independent

sales rep for one American company, and she worked for them for five years. In five years

she decided to take advantage of this company. So she decided to go to a local court and

filed a suit that she is to be reclassified into an employee. And the court made a ruling

that she was an actual employee of that company. Because the company controlled her, the company

managed her and she was to be an employee. Meaning the company was to pay a lot of taxes

which were calculated for all these years to the local government, plus pay her all

the benefits as if she was an employee, plus pay her all the holidays which she didn't

go to for five years, alright? So you can imagine, it was a really big sum for American

company. But that Colombian court ruling was actually enforced in the United States, and

American company although far from Colombia they were enforced to pay all this money to

the Colombian government and to that individual. So the risks of misclassification are really

high if you look at your relationships with that person. And there's even an IRS 20-step

test which you can go through together with your HR director and you would understand

that if you answer 'yes' to the most of the questions, then it would be considered by

IRS as an employee relationship. We would recommend you to employ that person. Obviously

it would be your own risk if you don't employ the person but we would help you to employ

that individual and then you would have a 100% compliant solution and that misclassification

risk would be eliminated.