It may not be a "mis-classification." Abstractors' clients are attempting to control more and more of the abstractors business, i.e. how they are paid, how much they are paid, how they perform their searches, what they will reimburse for, etc.  The more control they exert over their "independent contractors," the less likely they would be correctly classified as contractors - and, the more likely they will be considered employees. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker. 

Here is an excerpt from the IRS:

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

I think that the way some clients attempt to dictate the terms of the the relationship, they get dangerously close to crossing the line, in which case, they would be forced to treat abstractors like employees.

I agree in most situations, it would be difficult to classify an independent abstractor as an employee.  However, this is something that the clients and the abstractors should be aware of.  Clients need to avoid micromanaging their abstractors and the abstractors need to remain autonomous and not allow their clients to run their businesses.

Best,
Robert A. Franco
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