What Are the Dangers of Misclassifying Employees and Independent Contractors?
Employers should take great care when classifying workers. Misclassification can create serious legal problems, including audits of the entire workforce by federal and state tax authorities and even charge of penalties. Misclassification of workers is an area of increasing concern, as both the federal and state governments are ramping up efforts to investigate employee misclassification issues in order to raise revenue through penalties and increased payroll tax.
There are some financial incentives for companies and employers to classify employees as independent contractors. This can put a company at risk for misclassifying if policies and best practices are not in place to govern classification.
However, any financial advantages gained can be destroyed due to employee misclassification. That’s why it is really important to take preventative steps to avoid hefty fines, penalties, and potential reputation issues related to noncompliance of misclassification of employees and independent contractors.
The Law Offices of Payab & Associates is a Los Angeles based law firm with more than 17 years of experience in employment cases. Our office has successfully litigated many complex disputes including wrongful termination, sexual harassment, racial discrimination, wage and labor disputes, and retaliation cases.
Contact the Law Offices of Payab & Associates @ (818) 918-5522 or visit https://payablaw.com/ if you have any questions regarding your rights at the workplace.
Additional Reading
- Common Overtime Violation: Misclassifying Employees as Exempt
- Employers Will No Longer Be Able to Use Contractors as a Way of Avoiding Liability
- What Are the Benefits and Downsides of Being Classified as an Employee Versus an Independent Contractor?
- How Do You Classify an Employee Versus an Independent Contractor?
