FAQs

Flex is competitive SaaS platform/solution providing on-boarding, compliance, settlement and insurance services focused almost entirely on the courier market. Similar to Openforce, the Flex platform provides their clients with an end-to-end solution to establish automated workflows and processes. They recruit, enroll, and settle IC’s based on their client requirements.

We are really excited about these two great companies coming together to combine “forces” and provide greater value to our clients and ICs.

The purchase was finalized and effective on April 19, 2019.

No, Openforce acquired 100% of Flex. Flex is now a business unit or division of Openforce. Flex will focus its efforts on the courier market – but may be utilized for other types of clients if the Flex platform provides the best fit for the need.

Both Rob and Kirk are going to continue to bring their expertise, relationships, and knowledge to the industry and the Openforce team. Rob and Kirk have both become employees of Openforce and serve as Co-Presidents of the Flexible Workforce division.

Rob is a 40 plus year veteran in the courier industry was the Co-President of Flexible Workforce. His career began as a delivery driver and courier in 1975. Rob has served on the board of the MCAA for over 20 years and is a past president of the CLDA. Rob founded, sold, and managed several companies over his long tenured career. Rob also served as President and COO at SCI for 15 years.
Kirk is a 26-year veteran of the final mile delivery industry and was Co-President of Flexible Workforce. His career began in 1993 when he founded Corporate Couriers in Ft. Worth, TX. In 2006, he opened another location in Austin, TX. Kirk sold his business in 2012 and moved on to work for SCI as their National Business Development Director and Executive team member where he served for almost 5 years. Kirk served 12-years as a board member of the CLDA and served as President from 2014-2016. Kirk received his BBA degree from Texas Christian University, and resides in Fort Worth, TX with his wife, Kelley, and two daughters. Kirk enjoys fishing and thoroughbred horse racing.

Yes. He is the CEO of Openforce, and the Flex teams will roll up under him.

No. Nothing will change in your platform or processing. We will, of course, look for ways to bring the best of both platforms to all of our customers.

There are no plans for any business structure changes. Our commitment is to our clients and Independent Contractors. With that in mind, we will continue to focus first on ways to streamline the enrollment experience, provide more recruitment tools, and mitigate compliance risks as our priorities.

Our number one commitment is to you, our clients, and ultimately your Independent Contractors. We are looking to make recruitment, enrollment, and retention easier so ICs can join your workforce sooner and more efficiently. Both teams will be working hard to make that happen.

No changes are planned to names but Flexible Workforce will now be a part of Openforce.

Nothing will change in the way we are servicing our clients or ICs.

Yes.

All contracts will remain in effect.

Eventually, yes. The Openforce marketing team will assess and work with the Flex team to best understand the needs of all of our clients and potential clients to create one exciting new website that encompasses all that we offer.

You can continue to reach out to your designated account representative or contact with questions.

The only time employers should exert control over the day-to-day work of any worker is if the employer is issuing a W-2 and classifying the worker as an employee. If an employer has a significant number of temporary workers and has not reviewed their classification status with counsel, that course of action is recommended for a thorough review.

There are many other factors to consider, however there can indeed be concerns with assigning an organizationally controlled email address. Discuss with your employment lawyer if there is a feasible workaround. In some cases, it might be a viable option to use such emails.

You will need to follow the state laws in the state where the independent contractor is providing service to prevent challenges from local state authorities. The IRS or federal agencies can challenge the model as well from the federal level. If you are a multi-state organization, you may need to be aware of variations in the laws across all applicable states.

The classification is contractor versus employee. “Internal contractor” does not have a specific legal connotation; and the question really depends on the relationship between the worker and the employer.

First, it’s important to know the applicable test in your jurisdiction. If in a state where a strict ABC test applies, supplying tools, equipment, and instruction are all factors that weigh in favor of employee classification. Review the totality of the facts with an employment lawyer to determine if you are correctly classifying the workers.

If you are a hiring entity that has hired a contractor making use of a subcontractor, in a strict ABC test jurisdiction you may be liable as a hirer if the subcontractors are being misclassified. It’s important to clearly review your contract with the contractor to secure indemnification in such an event.

The law is aimed at protecting workers from being taken advantage of. Independent contractors enjoy freedom and flexibility when running their own business, while employees enjoy benefits and other legal protections. The original aim of the distinction is to maximize the benefit to both categories of workers.

The classification rests on the totality of the facts at hand. If they maintain an independent business, you do not control the means by which they conduct their work, and they are paid on a per project basis, they are most likely going to be classified as an independent contractor. Consult with an employment lawyer familiar with Florida and federal classification laws.

This is a rather complex legal question because it involves multiple parties. However, it is important to note that if the worker is rendering services to an employer—then all hiring/contracting duties, responsibilities and classification decisions are generally the responsibility of that employer. An outsourced staffing provider’s actions and interactions may have a bearing on classification findings related to that employer. It is likely best to consult with an employment lawyer familiar with applicable state and federal classification laws to make a quick review of the processes utilized both internally and by the staffing agency.

ICIS solution providers such as Openforce work with contracting companies and their counsel/advisors to design the workflows and processes that best suit business needs and mitigate misclassification risks. Once those optimum processes and workflows are established, ICIS solution providers such as Openforce then utilize their technology to enforce the designed processes and workflows for all onboarding 1099 workers—while maintaining a key system of record for all related 1099 worker data, qualifications, documents and settlement histories. If the workflow requirements are not met by the onboarding contractor—the portal indicates this to allow the company to make appropriate remediation or non-contracting decisions.

This question is best answered by an insurance attorney in the state that your business operates in. Though generally, these are different types of insurance coverages.

There is no current requirement for workers classified as independent contractors to maintain a Social Security Number.  Other laws and regulations apply across the various jurisdictions about reporting this information.  Hiring entities utilizing ICs should also be aware of the “B Notice” process and its effects.  ICIS systems such as Openforce provide a “TIN check” against an applicable EIN or SSN at the time of onboarding to prevent later B notice problems.

Typically, independent contractors are issued 1099s by the hiring business. ICIS providers such as Openforce offer multiple options for 1099 issuance.

This is a rapidly developing area of the law. An ICIS can help support an inference that workers are correctly classified as independent contractors by separating out all elements of their treatment by the hiring entity, by enforcing pre-defined onboarding and settlement workflows, and by preserving data and audit trails related to onboarding. In addition, depending on the plan selected with an ICIS such as Openforce, defense costs for agency-level claims is sometimes included.

This is delicate and should be handled carefully. It is not impossible. In addition to ensuring that the contract is clear, how they are treated moving forward must be changed. For example, if they were subject to management of their work previously, they should now be evaluated on a project by project basis to continue the contractual relationship.

As for independent contractor onboarding, make sure that any briefing does not resemble training. Clearly define the terms of the contract for the project they’ve been hired to complete. Specific questions should be directed to an employment lawyer.

This may be ok, but the specifics should be discussed with an employment lawyer. It is advisable that they should not be on the same payroll list as employees or receive similar communication as employees.

Yes, it applies at all points in the timeline.

Openforce provides reporting at multiple levels within the system—enabling contracting companies and ICs to maintain critical business information at their fingertips. Contracting companies are able to view, sort, filter and get reports on virtually any segment of their IC workforce, from enrollment through settlement. ICs are able to view and download 1099s, settlement history, profile information, etc.

Occupational accident insurance can be positioned as mandatory, similar to general liability, as required coverage for independent contractors to utilize the registry. The cost of occupational accident insurance is nominal in comparison to the propensity of workplace injury requiring medical expenses or wage replacement coupled with the reduced risk of reclassification.

However, mandating occupational accident insurance is still your decision and we can make it optional based on your IC enrollment preferences.

While the majority of registries we work with only require professional liability for independent contractors, additional coverage is available for contractors who wish to further insulate and protect their business. Ultimately, independent contractors share the same legal obligations and potential liability exposure as a registry. Independent contractors can be sued for bodily injury and property damage, resulting in financial insecurity.

Yes, contract caregivers can purchase their own occupational accident insurance on the open market.

The Openforce platform is HIPAA compliant and offers secure, digital and documented rate negotiations that are managed within Openforce’s software. Any text messages that Openforce sends to independent contractors do not contain sensitive information.

Yes, contract caregivers can setup manual and automatic payments directly with the providing insurance group.

Yes, Openforce offers a variety of tools and information to independent contractors to help them get acquainted with our platform. We provide managed onboarding services to assist with getting contractors fully onboarded in a timely manner, how-to videos, additional information on available contractor benefits and a monthly newsletter that provides updates on any new features that were released. Independent contractors also have the option to contact our customer support department via phone or email on an ongoing basis.

Of the clients that have made Openforce aware they underwent a Department of Labor audit, all results were positive with no infractions.

Openforce’s platform and services fees are dependent on the products purchased, as well as the size of the registry and number of contract caregivers we are providing services for.

Technically, a part-time or full-time status has no significant bearing on classification. The real question is the type of tests that might be applicable to your jurisdictions and claim exposures/types (e.g., the ABC Test, Economic Realities Test, etc.) and how the worker relationship operates in contract and in fact. As a practical matter, courts do utilize comparisons to see if workers are consistently classified by the nature of the work, the role, etc. Many lawyers will warn companies not to have employees and independent contractors performing the same work/roles—though it is not uncommon in areas like trucking (employee drivers versus owner-operator drivers). Even in these scenarios, it is highly recommended that all worker relationship practices (such as recruiting, onboarding, contracting, work, payment/settlement and beyond) clearly differentiate and reinforce the differentiation between the two roles.

As noted above, it is highly recommended that all worker relationship practices (from recruiting to payment/settlement and beyond) clearly differentiate and reinforce the differentiation between employee roles and independent contractor roles, and this would include bonus practices. If you choose a bonus-like practice for ICs because business reasons dictate doing so (e.g., for IC retention purposes), it may be better to have two different bonus processes and even program names to easily demonstrate the differentiation.

As discussed during the webinar, workers’ compensation is generally not applicable to independent contractors. Many contracting companies require that contracting ICs provide proof of occupational accident insurance coverage—this coverage provides a “similar” type of coverage for contingent workers and, as a result, can extend protection to the contracting company by providing an avenue of relief for the IC in the event of a work-related injury. Most occupational accident coverages will not include coverages for communicable diseases such as COVID-19 or seasonal flu—mainly because it is nearly impossible to definitively prove where the virus was contracted. Workers’ compensation rules related to work-from-home practices do not generally differ from working at the office if the employee is required to be working from home, but this is a question for your employment counsel.

While there are many legal nuances, training is generally inadvisable for independent contractors when possible to avoid. But the word “training” can sometimes be a loaded term in relation to ICs. “Training” may suggest that the company needs to teach the IC how to perform the work or role that the IC is contracted for, and this is inconsistent with the nature of a contractor workforce. If the contracting company is merely conveying information required to execute contractual obligations to a customer (e.g., where packages are required to be dropped at a customer site), the information can be conveyed without labeling this activity training (e.g., “Independent Contractor Best Practices”). Once again, this should be well-thought-out in a comprehensive plan for how your company interacts with ICs, from recruiting to contract termination. Please note that applicable laws sometimes require responsibility for training of IC workforces, and that may provide a different direction in the analysis.

Direction and control is a highly variable concept based upon the nature of the work relationship, the work contracted for, the jurisdiction involved, and the type of claim. Direction and control are at the heart of the legal analysis of misclassification. A common explanation from courts on this concept is that for a contracting company to show that it lacked direction and control over the worker, it must show that it did not control the “manner, method and means” in which the worker performed the services. Courts then examine each of these factors (manner, method and means) in relation to the specific facts of the worker’s relationship to the contracting company, the work performed, the pay, and all related details. Helpful hint: You can click on the following case link to read exactly how a court examines these concepts: Circle Health Partners, Inc. v. Unemployment Ins. Appeals of Indiana Dep’t of Workforce Dev., 47 N.E.3d 1239, 1243 (Ind. Ct. App. 2015).

Independent contractor pay should be based upon accomplishing a result, performing a specific job or completing a project. ICs are, in essence, vendors to your company, and their pay arrangements should reflect this. For example, if you contract with a residential landscaping service, you would typically pay the service for completing a “job”—e.g., biweekly yard maintenance or a specific tree trimming project. Your IC arrangements should reflect this same approach. Employees are typically paid for their time and effort without regard to success or completion (though bonuses may accrue for such success). ICs are paid to achieve an end or complete a result. Notably, a larger project can often be broken down into smaller projects or jobs to help break up the overall process and pay cadence. Monthly invoicing from the IC to the contracting company can be helpful in establishing a vendor-type relationship friendly to the IC misclassification evaluation process.

How it helps
U.S. residents and citizens with an adjusted gross income of $75,000 or less (adjust this figure to $112,500 for head of household or $150,000 for married filing jointly) will receive a one-time stimulus check for $1,200. That number increases by $500 for every child under 17. The amount is determined based on your 2019 personal tax returns, but if you have not filed yet, it will be based on your 2018 returns.

To be eligible, you must have a work-eligible Social Security Number and not be a dependent on someone else’s tax return.

How to get it
These payments will be sent to you directly via mail or direct deposit (however you normally receive a tax refund) and are expected to begin going out in April 2020. If you filed your tax returns in 2018 or 2019, no action is required on your part. If not, click on the links below for more information on how to obtain your check.

Additional resources
IRS’s FAQs

How it helps
EIDLs are one of two loan options available to self-employed individuals through the CARES Act. These low-interest, flat-rate loans can be used to cover expenses like paid leave, payroll (even if that means simply paying yourself), or lost revenue due to the pandemic.

When you apply, you may be able to obtain an advance of up to $10,000 and receive it in as little as three days. When used on covered expenses, this advance does not have to be paid back, even if you end up being denied for the loan itself.

How to get it
You can fill out a simple application online through the SBA website. Because, as an independent contractor, you are your own small business, you would enter your own information in the business section of the application. Qualification is based solely on your credit score. But again, you may be eligible for the $10,000 advance even if you don’t qualify for the loan. These are available on a first-come, first-served basis.

Additional resources
Chamber of Commerce step-by-step application guide
EIDL terms and conditions

How it helps
The new PPP loans are designed specifically to provide small businesses, including independent contractors, gig workers and sole proprietors, with cash support. The loan amount you are eligible for is 2.5 times your average monthly “payroll” expenses—which can include your own “salary” and health insurance premiums. What can be treated as “salary” is dependent on how you operate your business (e.g., are you incorporated, are you a sole proprietor, are you an independent contractor reporting on Schedule C). For example, for unincorporated independent contractors, your salary may be most easily determined by looking at the net profit listed on Schedule C of your tax return. If you contract with and provide services to multiple contracting companies, this is aggregated in the analysis.

If you have already filed your 2019 taxes, or prepared a 2019 return, this number is reported on line 31 of the Schedule C. If you have not filed your 2019 taxes but have accurate bookkeeping completed for all of 2019, this will be the Net Profit line on your Income Statement. Your Openforce account can help supply documentation to support these numbers. Please contact your tax advisor or business consultant for assistance in this regard.

You may also want to check applicable time limits —i.e., have you been operating your business (or rendering independent contractor services) prior to February 15, 2020?

Importantly, almost the entire amount of the PPP loan may be forgiven (no payback requirement) when applied toward qualifying expenses. These qualified expenses include items such as “payroll” costs (see above) and other designated business expenses listed in the Act.

Because these loans will be available through a list of approved lenders, some terms may vary but the interest rate will be 1% on the portion of the loan that is not forgiven.

How to get it
The PPP loans will be available through approved banks and credit unions, so consult with yours directly to see if they are participating in the program. No personal guarantee or collateral is required.

Additional resources
Treasury Department’s borrower fact sheet
Chamber of Commerce’s complete guide to the PPP
Chamber of Commerce’s PPP checklist
Sample application (learn what information to provide to your bank or credit union)

How it helps
Self-employed individuals, independent contractors, and gig workers do not usually qualify for unemployment benefits, but the CARES Act for the first time broadens the eligibility guidelines to include independent workers, meaning qualifying independent contractors have a direct claim for unemployment benefits under their own tax ID. The expanded program runs through December 31, 2020, and provides retroactive benefits from January 27, 2020.

The revised benefits add 13 weeks of unemployment payments to most states’ usual 26, increasing availability from six to nine months. States are required to use the Disaster Unemployment Assistance Program formula to determine the amount you will get. An additional flat weekly sum will be added on top of that for the first 4 months someone collects unemployment.

How to get it
If you want to apply for these benefits, you’ll need to prove you are either partially or fully unemployed, or unable and unavailable to work because of the circumstances related to COVID-19. Because as an independent contractor, you are self-employed, you’ll want to use your own EIN or SSN when asked for your employer’s tax ID number. As noted above, doing so allows you to aggregate revenues from all independent contractor sources in eligibility calculations. For more information, head to your state’s Department of Labor website or use the link below.

Note: The current unprecedented demand may cause delays in application processing and receiving funds.

Additional resources
How to apply for unemployment benefits (resources for every state)
Pandemic Unemployment Assistance information for ICs

How it helps
Although independent contractors are not usually included in paid sick leave benefits (though some states may have laws that include them), the FFCRA entitles eligible self-employed individuals to a paid sick or family leave tax credit. This is independent of any connection to a specific contracting company.

The paid sick leave credit is available to you as an IC if you are unable to work or telework while under quarantine or are experiencing symptoms of coronavirus and seeking medical attention. You may receive a credit of up to $511 per day (up to $5,110 for 10 days) or 100% of your average daily income for up to 10 days—whichever is less.

A paid family leave credit is available if the leave is taken to care for a sick individual or child at home due to a school closure. The credit amount is either $200 per day or 67% of your average daily income for up to 50 days.

Note: Under this act, your daily average self-employment income is calculated as your self-employment net earnings for the taxable year divided by 260.

How to get it
If you meet the criteria, you can claim the credit on your returns for the 2020 tax year. However, if you need it earlier, you may instead be able to deduct the amount of the credit you’re eligible for from your quarterly estimated tax payments.

Get in touch with your tax preparer to find out more about how this works, and remember to keep all medical records, notices of school closures and similar documentation.

Additional resources
IRS paid sick leave FAQs for the self-employed

How it helps
The IRS has moved the tax filing deadline for individuals and businesses from April 15 to July 15, 2020, which includes first-quarter tax payments (second-quarter payments are still due on June 15). Although anyone can take advantage of the extension, individuals who choose to file early will receive expedited tax refunds.

How to get it
You don’t need to take any specific actions, but you should check with your tax preparer to see if you’ll need to adjust quarterly payments based on your projected income.

Additional resources
IRS Filing and Payment FAQs
IRS Tax Resources (see the Tax Help section)
File Your Taxes Online for Free

How it helps
Self-employed individuals are required to pay self-employment taxes, usually quarterly. The CARES act, however, allows employers to delay these types of payroll taxes, and the self-employed are no exception: you can defer half of your self-employment taxes for over a year. These deferred taxes are required to be repaid over the next two calendar years—one half by December 31, 2021, and the other by December 31, 2022.

How to get it
Specific requirements for tax filings are still pending from the IRS. For more information, check the IRS Coronavirus page below and contact your accountant or tax preparer to discuss the options available.

Additional resources
IRS coronavirus tax guidance

How it helps
Under the CARES Act, small businesses and independent workers who pay themselves within a corporate structure (such as S-corporations and sole proprietorships) can now carryback up to five years of net operating losses (NOLs) for tax years 2018, 2019 and 2020. In short, this means some taxpayers will be able to receive additional refunds on taxes previously paid.

How to get it
Get in touch with your tax preparer to estimate your business losses for 2020 and file amended returns to potentially receive refunds for previous years.

How it helps
The CARES Act allows individuals under 59 ½ years of age to withdraw up to $100,000 from retirement plans such as 401(k)s or IRAs without incurring the 10% early withdrawal penalty tax. You may also pay tax on income from the distribution over three years. This option should be carefully evaluated and discussed with your plan provider.

How to get it
Contact your retirement plan provider to discuss early withdrawals and set up repayment terms. Anyone can apply if they have a 401(k) or IRA and are suffering health or financial impacts from COVID-19.

Additional resources
IRA and Retirement Plan Changes in the CARES Act

These government aid packages offer a slew of additional assistance options that you may be eligible for, including:

     

  • A halt on foreclosures and evictions by lenders of mortgages backed by federal agencies for 60 days starting March 18, 2020. Read the official announcement from the U.S. Department of Housing and Urban Development.

 

  • Forbearance of mortgage loans where the individuals holding the loans can prove economic hardship as a result of COVID-19. Read up on how to get more help with your mortgage.

 

How it works
As one of two new loan programs, the PPP loans are designed specifically to provide small businesses and the self-employed (like independent contractors) with cash support. The loan amount you are eligible for is 2.5 times your average monthly payroll expenses—which can include payroll and health insurance premiums for W-2 employees, but not payments to ICs (more on this below). ICs can apply in their own right for up to 2.5 times their monthly “payroll” expenses—which includes their average “salary” and health insurance premiums.

Importantly, almost the entire amount of the PPP loan may be forgiven (no payback requirement) when applied toward qualifying expenses. These qualified expenses include items such as payroll costs and other designated business expenses listed in the CARES Act.

Because these loans will be available through a list of approved lenders, some terms may vary but the interest rate will be 1% on the portion of the loan that is not forgiven.

Things to consider
As of the guidelines released by the Small Business Administration (SBA) on April 3, contracting companies cannot use payments made to or on behalf of ICs as part of their “payroll” costs. This directly impacts the maximum loan amount, the authorized use, and the eligibility for loan forgiveness. ICs also do not count as employees for determining the size limits for PPP relief (500 or fewer employees). The rationale for this appears to be that independent contractors can apply for their own PPP loan and other relief. As a result, much of the language in the CARES Act appears to only be applicable to employees (not contractors), so we encourage you to discuss these matters with your own legal counsel.

Additional resources
SBA’s PPP Interim Final Rule (clarifies guidelines in relation to independent workforces)
Treasury Department’s borrower fact sheet
Sample application (learn what information to provide to your bank or credit union)

How it works
EIDLs are the second of the two loan options available to small businesses and self-employed individuals through the CARES Act. These low-interest, flat-rate loans can be used to cover expenses like paid leave, payroll or lost revenue due to the pandemic.

When you apply through the SBA website, you may be able to obtain an advance of up to $10,000 and receive it in as little as three days. When used on covered expenses, this advance does not have to be paid back, even if you end up being denied for the loan itself.

Things to consider
Once again, ICs are small businesses, meaning they can apply for EIDLs by entering their own information in the business section of the application. This, however, raises additional questions: What if ICs incorrectly list a contracting company as their employer? Could such documentation have future ramifications on potential misclassification claims? These are matters to discuss with your legal counsel.

Additional resources
Chamber of Commerce step-by-step application guide
EIDL terms and conditions

How it works
Self-employed individuals such as ICs do not usually qualify for unemployment benefits, but the CARES Act for the first time broadens the eligibility guidelines to include them—meaning qualifying ICs have a direct claim for unemployment benefits under their own tax ID. The expanded program runs through December 31, 2020, and provides retroactive benefits from January 27, 2020.

The revised benefits add 13 weeks of unemployment payments to most states’ usual 26, increasing availability from six to nine months. States are required to use the Disaster Unemployment Assistance Program formula to determine the amount received. An additional flat weekly sum will be added on top of that for the first 4 months someone collects unemployment.

Things to consider
ICs can apply for these benefits if they can prove they are either partially or fully unemployed, or unable and unavailable to work because of circumstances related to COVID-19. To do so, they will provide their own EIN or SSN when asked for their employer’s tax ID number. However, several possible concerns exist related to this process, including a lack of clarity related to the mechanisms a state unemployment agency will use to process such a claim and what happens if an IC incorrectly lists a contracting company as their “employer.” (See the sample response below if an IC lists your company as an employer.)

The CARES Act as it pertains to ICs does not reference contributions by an employer or contracting company of an IC-claimant, suggesting that it intends to offer federally funded unemployment coverage directly to the ICs (rather than employer-contribution funded). However, several possible concerns exist related to this process, including a lack of clarity related to the mechanisms a state unemployment agency will use to process such a claim and what happens if an IC incorrectly lists a contracting company as their “employer.” In addition, what happens to the supply chain if unemployment benefits exceed an ICs’ normal pay, causing ICs to opt for unemployment coverage over performing their usual services? Once again, these are questions to discuss with your legal counsel.

Additional resources
Sample Response to a CARES Act UI Claim

How it works
Although independent contractors are not usually included in paid sick leave benefits (though some states may have laws that include them), the FFCRA entitles eligible self-employed individuals to a paid sick or family leave tax credit.

The paid sick leave credit is available to an IC if they are unable to work or telework while under quarantine or are experiencing symptoms of coronavirus and seeking medical attention. They may receive a credit of up to $511 per day (up to $5,110 for 10 days) or 100% of their average daily income for up to 10 days—whichever is less.

A paid family leave credit is available if the leave is taken to care for a sick individual or child at home due to a school closure. The credit amount is either $200 per day or 67% of their average daily income for up to 50 days.

Note: Under this act, daily average self-employment income is calculated as self-employment net earnings for the taxable year divided by 260.

Things to consider
If an IC meets the criteria, they can claim the credit on their returns for the 2020 tax year—this tax credit comes directly from the IRS, meaning it is independent of any connection to a specific contracting company. However, keep in mind that it also means ICs may take leave for up to 50 days for reasons related to coronavirus.

Additional resources
IRS paid sick leave FAQs for the self-employed

How it works
The IRS has moved the tax filing deadline for individuals and businesses from April 15 to July 15, 2020, which includes first-quarter tax payments (second-quarter payments are still due on June 15). Although anyone can take advantage of the extension, those who choose to file early will receive expedited tax refunds.

Things to consider
You don’t need to take any specific actions, but you should check with your tax preparer to see if you’ll need to adjust quarterly payments based on projected income.

Additional resources
IRS Filing and Payment FAQs
IRS Tax Resources (see the Tax Help section)

How it works
The CARES act allows employers to delay certain types of payroll taxes, including Social Security and Medicare. These deferred taxes are required to be repaid over the next two calendar years—one half by December 31, 2021, and the other by December 31, 2022. Self-employed individuals such as ICs can also defer half of their self-employment taxes.

Things to consider
Specific requirements for tax filings are still pending from the IRS. For more information, check the IRS Coronavirus page below and contact your accountant or tax preparer to discuss the options available.

Additional resources
IRS coronavirus tax guidance

How it works
Under the CARES Act, businesses can now carryback up to five years of net operating losses (NOLs) for tax years 2018, 2019 and 2020. In short, this means some taxpayers will be able to receive additional refunds on taxes previously paid.

Things to consider
Consult with your tax preparer to estimate your business losses for 2020 and file amended returns to potentially receive refunds for previous years.

No, it is not an automatic failure. The fact of a mixed fleet of ICs and employees is not necessarily the issue. The problem with prong B of the test is that it prevents employers from contracting with workers that perform the same work as the business itself. Generally speaking, any time you have independent contractors performing the same role that is done or could be done by the carrier and its own employees, there is a serious risk of failing this prong. If the ICs are providing different types of driving services from employees (such as last mile and courier, or courier and long haul), that may reduce the risk, but only marginally. Having an overlap in duties makes it tough to argue why a specific worker is an employee (and entitled to benefits and such) when they are performing the same function or providing the same service as ICs.

After AB5 was passed, there were many actions taken by several parties. The most relevant and successful was by the California Trucking Association (CTA), which achieved an injunction against the imposition/enforcement of AB5 for the trucking industry. The CTA argued that AB5 was preempted by federal transportation laws affecting motor carriers.  The Federal Aviation and Administration Authorization Act of 1994 (“FAAAA”), 49 U.S.C. § 14501, et seq., prohibits states from enacting or enforcing laws or regulations that relate to “a price, route or service of a motor carrier . . . with respect to the transportation of property.” The injunction temporarily rules that the FAAAA preempts AB5. The federal court has been asked to review the injunction. Assuming that the California federal courts find that AB 5 is not preempted by the FAAAA, it could set the stage for an appeal to the U.S. Supreme Court, because there is opposing case law from non-California jurisdictions holding that the FAAAA does preempt this type of regulation.

California is definitely the hot spot for misclassification litigation. While several other states are starting to get more active, the following states already have laws in place saying workers are presumed to be employees and setting standards employers have to overcome to prove independent contractor status: Pennsylvania, Delaware, Colorado, Minnesota, New York, and Maine. That said, their aggression in enforcement may vary. Florida and Texas tend to generate large amounts of misclassification lawsuits, partially due to a large number of carriers present in those states. New Jersey also recently enacted several pieces of legislation, referred to as the “Misclassification Package,” that aim to redefine the relationships between companies and independent contractors. Similarly, the U.S. House of Representatives passed the PRO Act, which has been compared to a federal version of AB5 but is unlikely to pass the Senate or White House.

In our model with different aspects of independent contracting that can have safeguards in place to avoid misclassification, we identified “terminating” as one of those aspects. This is a pretty broad topic, so we’ll offer this: Employees typically do not have contracts or rules governing their termination; the company may have policies and procedures they use in handling employees, but much employment is at-will without any further terms. This means employees may typically be terminated without advance notice or penalty. Conversely, independent contractors ideally should have a contract in place governing the terms of their working relationship. That contract may contain specific termination verbiage within it. That terminology can vary based upon your business needs and requirements. Once in writing, the best practice is to follow the documented terms, whether that be giving proper notice or complying with penalties. It is a good idea to have penalties for failure to meet those terms for both parties, as one-sided penalties or fines do not sit well with the court—and there are already enough contractor-related issues, so there’s no reason to provide an easy target!

Yes, we recommend almost always having separate policies for employees and ICs. There will necessarily be practices that are specific to employees only. And there may be other practices specific to ICs and that reflects your contractual relationship. As a matter of practice, employee policies do not apply to ICs. However, the policies and practices of a carrier may apply to both employees and ICs, particularly if they govern relationships and interactions. For example, how you onboard, how you process payment disputes, how you award services, etc. Remember, the key to having a legally defensible contractor model is to focus on the end result, not how the IC achieved it. Policies and procedures tend to overstep a bit and get a company involved in how the work is done, which can create a direction and control dilemma.

When AB5 went into effect, we saw many trucking companies pull operations out of California or end their IC fleets due to the risk that location within California would give rise to AB5 violations. The jurisdictional issue is unclear, but strong arguments exist that non-California resident ICs are not subject to AB5 due to both jurisdiction and preemption of federal law. Unfortunately, given the legal environment in California, the risk is still there. For now, the enforcement of AB5 seems to have taken a back seat to deal with the COVID-19 pandemic, so there is a bit of a pause. Hopefully, this added time will allow those fighting AB5 to present a case that results in a positive outcome for the IC environment.

Paying by the hour is not ideal, as it generally lends to an employee model. That said, if it is the “norm” in the industry, you can do it. If you do, however, be sure that the documentation (meaning invoices submitted for payment) clearly display billable hours and avoid what may appear to be time and attendance tracking. For example, it should display: 9.5 hours @ $25 p/h. It should not display: Start Time 8 a.m., Stop Time 5:30 p.m. = 9.5 hours.

Generally speaking, only employees should be trained, but if there are governmental or other agencies that require it, noting those requirements in the contract is best. If possible, do not have the ICs attend sessions sitting side by side with your employees. In fact, in-person training sessions should be avoided is possible. If it can be peformed solo or online, that is best.

Assuming badging is required for identification purposes to gain entry into a building or facility, it can have your logo, yes. A few things to keep in mind: 1. Always clarify the badging requirements and reasons why in the contract (to gain entry, etc.); 2. Try to avoid similar formatting for IC and employee badges; and 3. Add in defensible verbiage. For example: John Smith, Independant Contractor providing services on behalf of COMPANY NAME.

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