Suppose your company, Incredible, Inc. ("Incredible") maintains "contract" workers for long-term projects, and has done so steadily for the last three years. Since Incredible does not see these workers as "employees", it does not offer them benefits of any kind. One day, however, you a nice note from the IRS stating that Incredible has misclassified these workers, that a) they are actually common law employees entitled to the same benefits you offer your "regular" employees, b) among other things, you are liable for any taxes associated with these benefits you should have offered; c) that you now have to offer these workers benefits going forward. While you may not be able to do anything about the back benefits, prospectively, you have a plan. You will tell these workers if they can only continue to work for you through Sensational Staffing. Now they are Sensational's employees, and all payroll, tax and benefit issues are Sensational's problem, not yours, right? That is more or less what Microsoft thought in the 1990's. What can you do to avoid being another (mini?) Microsoft? The Emplawyerologist will wade through these waters after the jump...


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