EmployeesWhat Are The Penalties Of Misclassifying Employees As Independent Contractors?

The dilemma of owning an employee as an independent contractor is a massive one that organizations face to this day because there is no definite way of differentiating between them.

The state has imposed multiple behavioral and financial tests according to which one can be classified as one or the other, but the individual’s right to sue your company can be used dangerously against you according to the worker’s law in the States. This means that it is important for you to clearly draw that distinction. Failure to do so can result in the following penalties which can make you lose money unnecessarily.

1. Criminal Conviction

The IRS is known for detailed investigations into your case as an employer if you have a case of misclassification against you. If you are unable to prove that you were totally innocent and did not categorize intentionally, it could result in you having to go to jail because that counts as breaking the labor law which is quite serious in the total capitalist world.

2. The Grand Fine

Fines that can go up to half a million dollars can be imposed on you depending on the degree of your crime according to the IRS. The highest amount as the penalty is imposed on those who are purely determined to be employers who knew that the person was an employee yet treated him as an independent contractor, and did not pay much attention to the rights he must have been given as one.

3. “Tax Evader”

The state does not hold back much when it comes to determining who is and who is not a tax evader, and getting a label like that attached to you can make it really hard for you to stand confidently ask for financial assistance from respective institutions. Tax evasion is a serious crime in itself, and at the end of the day the worker’s rights add up as a tax for you.

It can become really difficult to progress without being on good terms with your credit score because institutions and banks do not take you seriously, and you can pretty much forget about those personal or business based investments you were hoping to make.

4. Payback

The limit that is currently imposed on the payback that you will have to reward your respective employee with is 3 years, and anything under that will result in you having to pay in full. This basically means that you simply pay the overtime charges and extra benefits that you thought you could get away with, and doing so along with the other penalties can be a real nuisance.

You as an employer might be wondering how difficult it is to make sure that all employee rights are not only met, but also recognized. The best way to ensure that you do not get caught in this mess is by running through the financial state tests and presenting them as evidence in the event that you are charged for misclassification because the state will never contradict itself.

Posted by Randy Blakeslee – GetnSocial