Independent Contractor Compliance

As companies increase their use of contract labor, they face new risks. Federal and state-specific laws govern the relationship between companies and contract workers. Employers and their employees can unintentionally violate these laws through innocent actions and policies, resulting in the possibility of huge penalties, back tax assessments, interest payments, and retroactive benefits. ClearPath’s compliance expertise is a welcome ally in this complex legislative environment.

Comprehensive Protection with ClearIC

Leverage our class-leading evaluation processes and expertise to ensure your company has a commercially viable risk-mitigation program:

  • Online evaluation and classification program for Independent Contractors
  • Documented 5 Step, 2 Person Recommendation Process
  • Comprehensive training programs for managers and consultants
  • Creation of Case Defense File for federal or state audits
  • IC Discovery and current state evaluation
  • Conversion of ineligible 1099 Contractors to W-2 status... Read more read more
  • Compliance with IC regulations, co-employment issues, wage & hour rules
Compliance Firewall

All of our services are designed around our Compliance Firewall, our unique, propriety risk mitigation model. The ClearPath Compliance Firewall is designed to protect our clients from the risks associated with the use of contract labor - including workers classification, co-employment, wage and hour rules - and ensures all our programs are developed with compliance as the core tenet.

Our programs are designed in conjunction with major labor law and tax firms, and cover the entire gambit of HR, labor and tax regulations. Our Compliance Department constantly monitors all new and pending legislation on both a national and state level and our program is updated to reflect any changes.

For more information or to speak to a member of the ClearPath team please complete our contact form.

ClearIC: Worker Classification and Audit Support

A multitude of different regulations and qualifying criteria exist in determining Independent Contractor classification, making it difficult to determine if a worker should be a 1099 or an employee. The ClearIC evaluation program encompasses federal and state regulations to produce a clear, consistent and documented process for 1099 compliance.

ClearPath has incorporated industry leading technology to automate the evaluation process in a program managed by our experienced compliance specialists. So our clients get the best of both worlds: online access to a logical, easy to use system; and the attention to detail and expertise which sets us apart.

Simple Process, Solid Solution

Hiring managers and prospective contractors complete a simple, quick, online survey based on IRS, DOL and state regulations governing Independent Contractor classification. Contractors are then required to upload all supporting business documentation, which is verified and electronically stored.

ClearPath compliance specialists analyze the completed surveys and review the supporting documents, in order to recommend the appropriate worker classification. The recommendation is made after a comprehensive 5 Step, 2 Person Recommendation Process. Detailed notes are made during the review process to substantiate the recommendation and provide information on key determining factors considered.

All information is electronically stored in a Case Defense File to ensure full accountability of due diligence... Read more read more

ClearPath Workforce Management Solutions

When necessary, the ClearPath ‘Escalation Process’ is used to resolve borderline or contentious recommendations, and enable genuine Independent Contractors to qualify.

Industry Leading Technology

Developed with time, accessibility and security in mind, the online surveys can be completed in as little as ten minutes through our secure, encrypted compliance portal. Each step in the process, from the initial request to the final recommendation is documented and date stamped, enabling detailed reporting and review. 

Seamless Integration

We provide a Compliance Portal that serves as the starting point for any new evaluation. This micro-site can be co-branded and is typically accessed by a unique URL or directly from a company’s intranet to ensure seamless integration. Features on the micro-site, which can be configured to client requirements, include a detailed FAQ section, guidelines, process flow diagrams and an introductory message explaining to hiring managers the rationale behind the program.

For more information or to speak to a member of the ClearPath team please complete our contact form.

Additional Risk Mitigation

Creation of Case Defense Files for IRS or State audits, plus full audit support

The ability to demonstrate a clear and consistent process for validating 1099 contractors is a critical component in the event of an audit. During our ClearIC process, ClearPath assesses the facts and circumstances of the contractor assignment and makes a recommendation on how the contractor should be engaged. All information and evidence gathered during this process is stored in our online evaluation system. Along with the assessment documentation, ClearPath collects supporting documentation from the contractor to build a Case Defense File that can be provided to an auditor to validate the treatment of the contractor on a 1099 or Corp-to-Corp basis.

Case Defense Files are created automatically for each evaluation conducted through our system.  Documents included in the file include: survey answers from hiring manager and the contractor; all documents uploaded to support the contractor’s business structure (including all proof of insurance documentation); and recommendation notes made by the ClearPath compliance team. These files can be printed or downloaded as and when required to assist a client, should they be audited, and to validate the classification status of each vendor.

Compliance Training and Education

A top down approach can be a key to success for any program, so executive-level buy-in and support for your corporate 1099 compliance program is crucial.  Equally important is educating your hiring managers, who through innocent actions and bad practices can unknowingly put your company at significant risk.

ClearPath provides comprehensive education and training programs combined with a change management strategy to ensure the success of a new program. Our training programs include seminars, webinars and training sessions for our clients to educate key stake holders and hiring managers on the mitigating the risks of using contract labor.

Corporate Policy Enforcement

Ensuring compliance with your corporate policies should be just as important for your contractors as it is for your regular employees. Corporate policy documents and procedures can be integrated into our onboarding process to include:

  • Enforcement of client specific NDA's
  • Intellectual property protection
  • Background screening requirements
  • Break in service rules
  • Insurance requirements
  • Alumni  / retiree re-engagement
Independent Contractor Engagement and Payment

ClearPath's Agent of Record program enables companies to engage, pay and manage their Independent Contractors, 1099's and sub-vendors under one central contract. The result is an enterprise-wide process with consolidated billing and minimal administration, delivering significant cost savings for our clients. Consultants who do not qualify to be paid as an IC can be converted to W-2 status via our Employer of Record service... Read more read more

For more information or to speak to a member of the ClearPath team please complete our contact form.

Why IC Compliance is an Issue

Although most of the rules and regulations governing the relationship between companies and contingent workers have been around for a long time, a new focus from the new government, the IRS and a multitude of federal and state agencies has caught the attention of users of contract labor.

Why is it an issue?
  • Increased IRS Audits (6000 random audits starting Feb 2010)
  • IRS claim underpayment of $34.7billion due to misclassification
  • New legislation regularly being introduced at Federal and State level
  • State audits already common, especially Labor Departments
  • Most audits actually triggered by-ex workers
  • 33 States signed MOU with IRS to share information
Risks
  • Reclassification = Fines, penalties, back taxes
  • Co-employment
  • Claims for benefits, overtime, stock options etc.
  • Liability due to lack of appropriate insurance / WC Coverage
  • Calculate your potential risk  Read more read more

For more information or to speak to a member of the ClearPath team please complete our contact form.

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