The high cost of worker misclassification
Abstract: Independent contractors (ICs) offer businesses several advantages. Unlike with employees, you don’t have to withhold income and payroll taxes; make Social Security, Medicare and unemployment insurance contributions; pay overtime; or provide employee benefits. Treating an employee as an IC has always been risky. But in the last few years, these relationships are being looked at more closely and more often. Revenue-strapped tax authorities are scrutinizing worker relationships and often reclassifying ICs as employees. This article reviews the risks of worker misclassification and offers tips on how to tell the two apart.