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Plan Sponsors Beware When Classifying Independent Contractors for Benefit Plan Purposes

Employers generally understand that “employee benefit plans” should only be provided to “employees” and that “independent contractors” should be excluded from benefit plan participation. While this concept is simple in principle, it is not as simple in application, since the determination of whether an individual is an independent contractor or an employee is not based on a bright-line test; rather, it is based on a facts and circumstances analysis. With the increase in the “gig” economy, the continued use of temporary or leased employees, and the periodic need to have an employee provide transition services on a limited basis following a termination of employment, minds can easily differ on an individual’s proper classification. To further complicate the matter, there are two different sets of rules that govern the determination of whether an individual is an independent contractor or an employee.  As we noted in our Labor and Employment Group’s alert… Continue Reading

November 2022
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