It is important that employers understand the distinctions between employees (e.g., “W-2” employees) and independent contractors (e.g., “1099” workers).
Classification can be a complex task, prone to mistakes, myths, misunderstandings, and classification errors – whether innocent or intentional. And employee misclassification mistakes can cost you. With today’s tax revenue shortfalls, government agencies are cracking down on misclassification of workers.
Employee misclassification is an enforcement focus of the IRS and state tax and labor departments. The IRS baseline is that every worker is considered a W-2 employee unless employers prove otherwise.