Employee or Independent Contractor – Why Classification Matters

The Department of Labor and the Internal Revenue Service have joined together in an initiative to end the practice of misclassifying employees as independent workers or contractors. Millions of workers are misclassified as independent contractors instead of employees, which represents millions in lost payroll tax payments that are used to pay for programs such as Social Security and Medicare. If violations are reported, an employer could be subjected to penalties that include 20 percent of all the wages paid, plus 100 percent of the FICA taxes (employer and employee share) as well as criminal penalties up to $1,000 per misclassified [...]