Search results
- Wage law violations. Employers that hire individuals as independent contractors (who should instead be classified as employees) may be held liable for failure to pay overtime and minimum wage under the federal Fair Labor Standards Act (FLSA) and applicable state wage laws.
- Unpaid employment taxes. For workers misclassified as independent contractors, employers may also face penalties for failing to withhold and remit state and federal payroll taxes, including failure to make social security and Medicare tax payments.
- I-9 violations. Workers who are misclassified as independent contractors could also create employer liability relating to employer verification requirements.
- Unemployment insurance shortfalls. Another potential cost of misclassification may be penalties for failure to pay state unemployment insurance for the individual.
People also ask
What happens if an employee is misclassified as an independent contractor?
Is a worker considered an independent contractor under the FLSA?
Should employers classify workers as independent contractors instead of employees?
What if I've been misclassified as a contractor?
Misclassification occurs when: A worker is an employee under the law but is treated as an independent contractor by the employer. The FLSA applies whenever there is an employment relationship between an employee and an employer. Impacts of Misclassification.
- Independent Contractors
- Why Do Employers Misclassify Employees?
- Are There Penalties For Misclassification?
- The U.S. Government Takes The Issue Seriously
- How Employers Can Protect Themselves
What is an independent contractor? This IRS publicationprovides a detailed explanation. The key element, however, is the amount of control an employer has over the worker. Generally speaking, a company that contracts with an independent contractor tells the contractor what the scope of work is, but doesn’t have any control over how the contractor a...
The simple answer is money. By classifying a worker as an independent contractor instead of employee, an employer avoids the following expenses: 1. Employer's share of Social Security and Medicare taxes 2. Overtime pay 3. Employee benefits, including vacation, holiday, and sick pay 4. Unemployment compensation tax 5. Workers' compensation insurance
First of all, how do employers get caught? One way is when a worker who believes they have been misclassified as an independent contractor files a complaint with either their state Department of Labor or with the U.S. Department of Labor (DOL). Another way is when a worker who has been classified as an independent contractor files for unemployment ...
The July 2011 newsletter of the American Bar Associationstated: “By some estimates, contingent or temporary workers could reach 30-50% of the U.S. workforce. A federal study contends that an estimated 3.4 million employees are classified as independent contractors when they should be reported as employees. “A 2009 study by the treasury inspector ge...
Endeavor to properly classify workers. If you are a Justworks customer, you have access to HR professionals at the ready to help you determine the best way forward with these complicated issues. If you hire a worker and disagree on the individual's classification, you can file Form SS-8, Determination of Worker Status for Purposes of Federal Employ...
Misclassifying employees as independent contractors is a serious problem because misclassified employees may not receive the minimum wage and overtime pay to which they are entitled under the FLSA or other benefits and protections to which they are entitled under the law.
Jun 3, 2022 · The misclassification of employees as independent contractors is one of the most serious problems facing affected employees, employers and the U.S. economy. Misclassified workers are denied basic workplace protections including rights to minimum wage and overtime pay, making it harder for them to support themselves and their families. Lower pay ...
Misclassifying workers as independent contractors adversely affects employees because the employer's share of taxes is not paid, and the employee's share is not withheld. If a business misclassified an employee without a reasonable basis, the business can be held liable for employment taxes for that worker.
Mar 20, 2024 · You use Form 8919 to figure and report your share of the uncollected Social Security and Medicare taxes due on your compensation if you were treated as an employee instead of an independent contractor.
