The issue of who is an independent contractor and who is an employee is getting more attention from cash-starved states. While the federal government has taken some initiative to address a perceived gap in tax revenues and coverage because of workers misclassified as independent contractors, some states have gone beyond these efforts to institute new requirements and penalties to employers failing to comply.

Determining whether a worker is an employee or independent contractor is complicated because each case must be considered on its own set of facts and circumstances to determine worker status under the various employment-related laws.

In this economic environment, states are seeking new angles to capture more revenue to make up for statewide shortfalls. Twenty-eight states have laws, rules, requirements, or provisions that affect the application of worker status.

This strategic white paper provides a brief description of the compliance provisions and potential penalties for each state that has put new requirements in place. Notes about a particular state's involvement in multi-agency or federal initiatives that may lead to more comprehensive enforcement also is included.