What is Misclassification Risk?
Misclassification risk arises when a company incorrectly classifies workers as independent contractors instead of employees. This misclassification can lead to significant legal, financial, and reputational consequences, including:
Legal Penalties: Fines and penalties from regulatory bodies for failing to comply with employment laws.
Tax Liabilities: Back taxes, interest, and penalties for unpaid payroll taxes.
Employee Benefits: Costs associated with providing retroactive employee benefits such as health insurance, retirement contributions, and paid leave.
Litigation Costs: Legal fees and settlements arising from disputes or lawsuits by misclassified workers.
Why Companies Need to Care About Misclassification
Compliance and Legal Risks: Non-compliance with employment laws can result in severe penalties and legal actions.
Financial Implications: Back payments for wages, taxes, and benefits can be substantial.
Operational Disruptions: Investigations and lawsuits can disrupt business operations and damage company reputation.
Employee Morale: Misclassification issues can harm employee trust and morale, impacting overall productivity.
How OmniProtect Covers Your Misclassification Risk
OmniProtect, an add-on service offered by Omnipresent, provides a safety net for businesses by mitigating the financial risks associated with worker misclassification. Here’s how OmniProtect works and what it covers:
Reach out to help@omnipresent.com to indicate your interest in OmniProtect
If you haven’t done so already, accept the Client Terms presented when you add your first contractor
Input the details of your contractor
Use the contract template provided to sign contracts with your contractor without amendments
Fill in the misclassification assessment - you need to score a Low-Medium to be covered
As soon as you are deemed to be eligible for OmniProtect, you will see that your contractor is covered from the effective date
Coverage Details
Legal Costs: Up to USD $25,000 for verifiable legal defense costs per protected contractor.
Tax Penalties: Up to USD $100,000 for tax liabilities, interest, fines, and penalties imposed due to misclassification.
Third-Party Costs: Coverage for other verifiable costs and expenses arising from third-party claims due to misclassification.
Limitations and Exclusions
Exclusions: Coverage does not extend to incidents involving previous employment, harassment, unlawful discrimination, criminal acts, or events prior to the purchase of OmniProtect.
Conduct of Claims: Clients must promptly notify Omnipresent of any potential misclassification issues and cooperate fully in the claims process.
Maximum Liability: Omnipresent’s liability is capped at USD $100,000 per contractor or USD $1,000,000 per client in aggregate over the duration of the service term.
Termination and Renewal
Initial Term: OmniProtect subscriptions begin on the effective date and last for one year, automatically renewing unless terminated with 30 days' notice.
Termination: Omnipresent may terminate the subscription for non-payment or other breaches, while clients can terminate with prior notice.
Conclusion
By subscribing to OmniProtect, companies can safeguard against the financial and legal repercussions of worker misclassification. The service provides essential coverage and peace of mind, allowing businesses to focus on their core operations without the looming threat of costly misclassification disputes.
For more detailed terms and conditions, refer to the OmniProtect section of the Omnipresent Client Terms document.