Quarterly Compass 1/1/26

Welcome back to “The Quarterly Compass,” the email newsletter of True North Legal Group.  This resource is designed for entrepreneurs, small business owners, executives, and business-minded professionals in Northern Michigan.

Every quarter, we’ll head in four directions.  First, the “East” section (directly below) will be dedicated to legal updates from TNLG that may be relevant to your venture.  Then head “South,” where we’ll highlight a local business or entrepreneur doing great things in Northern Michigan. Out “West,” you’ll find information about future events or developments that may soon impact you, your business, or your employees.  Finally, True “North” will include a short, actionable insight for personal or business growth.

No matter your bearing, we hope you’ll find “The Quarterly Compass” to be a helpful resource along the way.

Independent Contractors vs Employees

When the Line Between Contractors and Employees Is Getting Harder to See

Independent contractors play a critical role for many Northern Michigan businesses — designers, trades, seasonal help, bookkeepers, consultants. Used properly, the 1099 model offers flexibility and efficiency. Used casually, it creates quiet risk.

At the federal level, worker classification will be an IRS enforcement priority in 2026, largely because misclassification affects payroll taxes, unemployment insurance, and benefit programs. This isn’t a new concern — but it is persistent. Businesses that rely heavily on contractor labor are simply more likely to face scrutiny when the facts don’t match the label.

What’s changed is the broader legal landscape. Federal enforcement standards have shifted back and forth, creating uncertainty about which tests apply and when. And even when enforcement softens in one area, exposure can still arise through audits, private lawsuits, or state action.

Michigan adds another layer of risk, with state-level developments drawing attention. Senate Bill 6 — introduced in January 2025 and advanced out of committee by May 2025 — would move Michigan toward a stricter “ABC Test” for independent contractor classification, along with enhanced penalties and wage transparency rules. The proposal presumes workers are employees unless a business can prove otherwise, including that the work falls outside the usual course of its business — a standard many small employers would struggle to meet. While not yet law, its progression into 2026 signals a clear policy direction: independent contractor status is becoming harder to defend and easier to challenge.

Why this matters:  Misclassification rarely causes problems right away. It tends to surface later — often after a relationship ends — bringing back taxes, penalties, interest, wage claims, benefit plan complications, and sometimes personal liability for owners.

A simple  check for 2026:  When a worker follows your schedule, uses your tools and systems, performs a core function of your business, and relies primarily on you for income, the law may view them as an employee — regardless of what the contract says or how flexible the arrangement feels.

What smart owners are doing now:  They’re reviewing who is paid as a 1099 and why. They’re cleaning up contractor agreements and onboarding practices. And they’re correcting “employee-like” habits — such as rigid scheduling or close supervision — that quietly create risk.

Independent contractors aren’t going away. But neither is scrutiny. Treating worker classification as an intentional business decision — rather than a default — is one of the simplest ways to reduce avoidable exposure in 2026.

Bay View Flooring: From Service to Stewardship

When I walked up to my friend and neighbor Jon Woolfolk’s home in Traverse City’s Oak Park neighborhood on Halloween, I followed a full Yellow Brick Road winding from the street to the garage— where Jon was dressed as a munchkin, fully committed to the role. Friends and family joined in the fun, as their whole garage was decorated like the imperial city of Oz.

Nothing about the scene hinted at accomplishments or credentials. It was simply a neighbor showing up for his community and his kids. You’d never know, from that moment alone, that Jon is a Georgetown MBA, a graduate of the U.S. Naval Academy, and a former Navy Flight Officer. But that combination — humility paired with deep leadership experience — shows up clearly in his work.

Jon is the proud owner of Bay View Flooring, where he brings discipline, care, and long-term thinking to every project. Learn more about Jon and his business in the following Q&A:

Q: What inspired you to build your life — and buy a business — in Northern Michigan?

Northern Michigan offered us the opportunity to return to family and build a life rooted in long-term relationships and shared history. With a four-year-old son and  six-month-old daughter, being close to family was a major priority, and coming back to the same neighborhood where Margaret grew up brought a sense of continuity and belonging. Buying Bay View Flooring allowed us to pair that personal return with entrepreneurship, and after years in larger, more transient markets, we were drawn to owning a business where trust, craftsmanship, and relationships truly matter.

Q: What are the key characteristics of our community that have helped you grow?

What surprised us most was how welcoming and supportive the community has been. From the start, we were met with genuine openness, encouragement, and a willingness to build relationships, which quickly grew into meaningful friendships and professional partnerships. Northern Michigan is a place where reputation matters and people show up for one another, and that sense of mutual investment has been critical to our growth.

Q: What excites you about the next twelve months of your organization?

The year ahead is about investing in people and expertise. We have industry-specific training lined up for our installer crews and apprentices, and our design team will be attending multiple flooring and design conferences to stay current on emerging products, techniques, and trends. These investments allow us to continue raising the bar and ensure we’re delivering exceptional craftsmanship while offering the community the most informed, up-to-date guidance.