Why does proper independent contractor vs. employee classification matter? Independent contractors vs. employee classification… is it really that big of a deal? Definitely. Why? Making an incorrect classification can expose you to labor lawsuits, penalties, and back payroll taxes. The U.S. Department of Labor wants to ensure fair labor practices, since misclassifying an employee as
The classification of workers as independent contractors or employees has significant implications — both tax and nontax — for all businesses.
As a result of the coronavirus (COVID-19) crisis, your business may be using independent contractors to keep costs low. But you should be careful that these workers are properly classified for federal tax purposes. If the IRS reclassifies them as employees, it can be an expensive mistake. The question of whether a worker is an
Many employers prefer to classify workers as independent contractors to lower costs, even if it means having less control over a worker’s day-to-day activities. But the government is on the lookout for businesses that classify workers as independent contractors simply to reduce taxes or avoid their employee benefit obligations.