Misclassifying Employees as Independent Contractors can Result in a Visit from the IRS – Los Angeles Wage & Hour Claims Attorneys Blumenthal, Nordrehaug & Bhowmik

by Norman B. Blumenthal on February 18, 2013

Employers who misclassify employees as independent contractors can receive a very bad visit from the Internal Revenue Service (IRS).  Why?  Because misclassifying employees can have severe tax consequences.  Consider the following:

  1. Federal Income Tax Withholding - If a misclassified independent contractor has not paid their personal income tax due, the IRS may require the employer to pay the tax.
  2. Social Security Tax – If workers are reclassified, the employer would be liable for the employer’s share of FICA and Medicare tax.
  3. Federal Unemployment Tax & Workers Compensation – Employers would be liable for past taxes unpaid.

Add penalties and interest as well as the damages payable to the employee, and the cost to correct a misclassification situation can be very penalizing to an employer.

If you are an employer who uses independent contractors, confront these issues before an audit or litigation.

Blumenthal, Nordrehaug & Bhowmik is an experienced California employment law firm with offices located in San Diego, San Francisco and Los Angeles. The firm dedicates its practice to contingency fee employment law work for issues involving misclassification as a salaried worker exempt from overtime, failure to pay vacation wages, misclassification as an independent contractor, off-the-clock work, wrongful termination, discrimination and other California labor laws.

Leave a Comment


1 × six =

Previous post:

Next post: