Have you Misclassified Employees as Independent Contractors?

An employer enjoys several advantages when it classifies a worker as an independent contractor rather than as an employee. For example, it isn’t required to pay payroll taxes, withhold taxes, pay benefits or comply with most wage and hour laws. However, there’s a potential downside: If the IRS determines that you’ve improperly classified employees as independent contractors, you can be subject to significant back taxes, interest and penalties.

Don't Misclassify employees as Independent Contractors

To determine whether a worker is an employee or an independent contractor, the IRS considers three categories of factors related to the degree of control and independence:

1. Behavioral. Does the employer control, or have the right to control, what the worker does and how the worker does his or her job?

2. Financial. Does the employer control the business aspects of the worker’s job? Does the employer reimburse the worker’s expenses or provide the tools or supplies to do the job?

3. Type of relationship. Will the relationship continue after the work is finished? Is the work a key aspect of the employer’s business?

Determining the proper classification under these factors may not be easy. If you’re concerned you may have misclassified workers, please contact us.

Jenna McQuinn

About Jenna McQuinn

Jenna McQuinn is the Director of Marketing at O'Connor & Drew P.C, where she works to align the goals of the firm with consistent brand messaging. She previously worked as a Social Media and Digital Marketing Manager for several brands.



Jenna McQuinn
Author: Jenna McQuinn
Jenna McQuinn is the Director of Marketing at O'Connor & Drew P.C, where she works to align the goals of the firm with consistent brand messaging. She previously worked as a Social Media and Digital Marketing Manager for several brands.