Misclassifying workers can be costly business mistake

By Marcie Geffner - Dun & Bradstreet

Classifying workers as independent contractors has plenty of appeal. You’ll have a lot more flexibility in hiring, firing, scheduling and compensating them. You won’t have to withhold income taxes, pay Social Security or Medicare taxes or pay unemployment tax on their wages.

That’s all good if your workers are indeed independent contractors. If they’re actually employees, misclassifying them as contractors without a reasonable basis for that decision could land you in a heap of trouble.

Class-action lawsuits, unwelcome attention from regulators, negative publicity, liability for employment taxes and benefits, and various fines and penalties are just some of the potential consequences of worker misclassification. Examples of industries that have been hard hit include construction, ride-sharing, long-haul trucking, package delivery, newspaper delivery, and professional football.

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