“We are declaring Arizona open for business when it comes to businesses that are able to use independent contractors,” NFIB State Director Farrell Quinlan told Arizona Business Daily. “This is more than Uber, this is more than that. This is the ability for people to create their own jobs and be freelancers.”
The Internal Revenue Service and the Department of Labor have grown concerned over the classification of workers as 1099 independent contractors. These contractors do not need to be provided with benefits or hourly wages and are responsible for their own taxes, making using them an attractive alternative to traditional W2 employees.
Some businesses predominately use independent contractors, which also are traditionally not strictly controlled by their employers and own their own equipment instead of using equipment owned by the employer.
There are several limitations on who can be an independent contractor, and states are under pressure to further limit the use of this kind of employee based on concern that some businesses might be using these employment contracts fraudulently.
“There is a definite war on independent contractors being waged,” Quinlan said. “What we’re doing is we’re creating, essentially, a legal safe harbor.”
The idea, Quinlan said, is to offer businesses the presumption of innocence; that use of independent contractors would be assumed legitimate as long as those contractors are appropriately declared and documented.