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It Started with a Contractor
Picture this: you’ve just onboarded a high-impact expert—independent, mission-driven, and ready to accelerate your project. But weeks pass, and doubt creeps in. Are they truly an independent contractor, or is your organization drifting into co-employment territory?
In 2025, that question isn’t just legal—it’s strategic. Misclassification can slow projects, damage your brand and reputation, and weaken your workplace culture. Let’s look at a few steps you can take to protect your business and empower your people.
Regulatory Tightrope in 2025
This year, the U.S. Department of Labor issued Field Assistance Bulletin 2025-1, directing investigators to pause enforcement of the 2024 classification rule and instead use the longstanding economic realities test under FLSA guidelines. At the same time, courts in New Mexico upheld the 2024 rule, reinforcing its continued weight in certain jurisdictions.
Layer on stricter standards in states like California, New Jersey, and Massachusetts, and businesses must navigate a complex, multistate compliance landscape.
Missteps Come at a Cost
Maintaining workforce compliance is not merely optional; rather it’s foundational to ensuring your organization remains above board and is attractive to job seekers. Misclassification can have severe impacts on:
· Talent strategy: Experts seek autonomy and clarity. Compliance uncertainty drives disengagement and talent churn.
· Legal risk: Co-employment risks create shared liability for wage, tax, and discrimination claims.
· Brand and culture: Ambiguity erodes trust, slows execution, and disrupts team cohesion.
According to the Economic Policy Institute, 10–30% of U.S. independent contractors are misclassified exposing organizations to massive penalties, reputational harm and talent loss. In fact, a single misclassification lawsuit can cost companies an average of $6 million when legal fees, back wages and penalties are included.
Building a Compliant, High-Performance Contractor Ecosystem
When expectations are clear—who owns what, who delivers what—you don’t just mitigate risk. You empower talent to perform at their best. Framed in this way, compliance can, drive connection, engagement, and results.
Stay ahead with a defined process
Here are a few suggestions to help define your employment classification process.
· Base decisions on the FLSA’s economic realities test, reviewing classifications regularly.
· Define the engagement through contracts that outline scope, deliverables, and independence.
· Clarify responsibilities to avoid blurred lines that can trigger co-employment concerns.
· Offer optional training like safety or DEI specifically for contractors. Make sure these onboarding procedures differ from those offered to full-time hires to avoid blurred lines in employment status.
· Standardize your approach across locations to ensure consistency amid evolving state laws.
· Partner with trusted experts to build scalable, multistate contractor strategies.
Where Compliance and Performance Meet
At The Planet Group, we know that compliance is about more than policy — it’s about people, performance, and staying ahead of risk. That’s why we partner with trusted experts like Suna Workforce Management, combining our global staffing expertise with deep regulatory insight.
“Workforce compliance is no longer a back-office issue, it’s a front-line business priority,” said Michael Larkins, President of Suna Workforce Management. “Clients partner with us to minimize risk but they stay with us because we help them unlock performance through clarity and control.”
The Planet Group’s Experts Help Navigate Complex Regulations
True workforce compliance goes beyond checking boxes — it’s about building confidence, trust, and performance at every level of your contractor ecosystem. The Planet Group’s experts help organizations navigate complex regulations, reduce risk, and unlock their full potential.
From targeted classification audits to scalable workforce strategies, our experts deliver the clarity and control you need to stay compliant and competitive — no matter where you operate.
Turn Compliance into a Competitive Edge
In 2025, the rules are shifting—but opportunity lies in clarity. Organizations that prioritize compliant contractor engagement now will gain more than legal peace of mind — they’ll gain a performance advantage. Let us help you get there.
