Risky Business: Classifying Employees vs. Independent Contractors

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.

Disclaimer: This information is provided as a self-help tool and does not constitute legal or financial advice. Laws and regulations change often, and decisions as to whether or how to use this information and/or what actions to take are solely those of the viewer. The providers of this information disclaim any and all responsibility and liability for its accuracy, completeness or fitness for your particular business purposes.

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