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Chapter 5 Video Case 1

In: Business and Management

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How to Avoid Misclassifying Workers
The Wall Street Journal
By EMILY MALTBY The article is in reference to the degree of control over the workers, the worker’s financial opportunity, and the type of relationship small businesses decision reflects the outcome of company tax codes. The IRS put in place an audit system that tries to crackdown on employers who misclassify workers as independent contractor trying to avoid paying payroll taxes, other employment related expense such as Social Security, Medicare, and Unemployment taxes. The appeal of using outside workers has grown many small businesses that struggled to stay alive during the economic recession. So, what is the problem? Many studies have shown that local businesses misclassify anywhere from 10% to more than 60% of their workers as independent contractors, which they blamed on the complex tax codes that are out in place by the IRS. The codes are not in black and white standards like many of the IRS rules and regulations. The reason the IRS is cracking down on this issue is to boost tax revenue by making sure employers are paying for all staff workers. Despite the threat of a payroll audit, more small employers are finding that independent contractors are essential to remain competitive and keep technology, marketing, and sale growing. In this case we see why Human Resources Management is an important part of the organization. Because it has a significant source of competitive advantage, it’s also an important part of organizational strategies, and the way organizations treat their people. With the organization’s structure in (HRM), managers have to find people to fill the jobs that have been created or to remove people from jobs if business circumstances require. This is the beginning...

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