Independent Contractor vs. Employee - 2026 IRS Guidance on Avoiding Worker Misclassification

Course Description

With states increasingly tightening their rules, getting worker status wrong can cost employers dearly. When someone is labeled a 1099 contractor but later deemed an employee, rising labor expenses can quickly be followed by a federal review that leads to steep back taxes and a payroll assessment capable of seriously destabilizing a business. Even though federal tests for judging these relationships haven’t shifted dramatically, state-level pressure continues to move more roles onto the formal payroll.

So what makes someone an independent contractor? The key is true independence. You must be able to show that the worker is not economically dependent on your business. That means looking at who controls pay structure, tools and equipment, work hours, and the manner and means of performing services. Then you examine the agreement itself: Is there a risk of loss to the worker? Who pays which expenses? Does the worker clearly operate a separate business? The more a contract resembles an employment agreement, the higher the chance you are misclassifying.

In January 2024, the DOL issued its Final Rule on worker status. It moved away from relying only on the IRS common-law approach or state ABC models, and instead finalized a test centered on economic reliance and outward signs of running an independent business, supported by additional factors that may point toward either independence or employment. This webinar explains the Final Rule in detail so you can evaluate your contractors for misclassification risk, document your reasoning, and defend your position during a compliance review. The OBBB Act of 2025 reinstated the ABC test, and you’ll learn how that test aligns with the DOL rule in practice.

Join Mark for this essential program for hiring managers, payroll, and A/P teams. With focused training, your company can make sound worker classification decisions and avoid costly misclassification penalties. As a former auditor, Mark emphasizes that doing this work carefully is just as important as complying with your employees.

Learning Objectives:-

• Know and apply the factors that determine independent contractor vs employee status.
• Understand how state rules differ from federal standards.
• Correctly categorize all workers.
• Defend your position if questioned.
• Understand penalties and fines tied to errors.
• Document the reasons for your decisions.
• Train HR, hiring, and payroll teams effectively.

This session delivers practical learning benefits and real-time application.

Who Should Attend?

• Payroll and HR managers and staff
• hiring personnel
• internal/external audit teams
• A/P managers and staff
• Personnel executives.