In a previous post, we talked about the decision companies face in classifying workers as independent contractors—those who receive a 1099 for tax purposes—and traditional employees who receive a W2.
Specifically, we mentioned that Lyft, in its Initial Public Offering (IPO) prospectus, cited the classification of its drivers as contractors as a potential risk for its business. In that post, we ended with a question: Why would a company expose itself to such risk by using one classification over another?
Here, we’ll talk about the benefits companies typically use to justify classifying workers as independent contractors rather than employees, even in the face of potential legal, tax, and regulatory issues.