Up to 30 percent of employers misclassify their employees as independent contractors, according to national estimates. Misclassification occurs when an employer improperly classifies a worker as an independent contractor instead of an employee. Unfortunately, the consequences can be severe. Some businesses intentionally misclassify workers to try to save on taxes or avoid other costs associated with having employees, but the mistakes can be unintentional as well.
Key Factor May Be Level of Control
Distinguishing between an employee and an independent contractor, although complicated, is important, and there are multiple factors you should evaluate before classifying a worker. When determining a worker’s classification, keep the following IRS quote in mind: