North Dakota Independent Contractors laws & HR compliance analysis

North Dakota Independent Contractors: What you need to know

Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.
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Employers that use the services of independent contractors run the risk that a state or federal agency could later find that the contractor should have been classified as an employee. The result is that the employer could be liable for the payment of benefits, back taxes, and penalties that were never contemplated at the time the contractor was hired. However, the North Dakota Department of Labor is authorized to verify the independent contractor status of future or existing work relationships in the state, giving employers peace of mind at the beginning of the work relationship that the independent contractor status is appropriate in any given situation (ND Code Sec.34-05-01.4). In addition, the Department has authority to determine the status of a work relationship after it has ended within the context of a claim for unpaid wages. An affirmative verification of independent contractor status from the Department of Labor protects a business from retroactive liability if another agency later determines that the verified relationship is an employment relationship. If another agency does so, it may not charge an employer retroactive premiums or penalties. The independent contractor verification process is completely ...

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