March 14, 2012

Susan Eisenberg and Nefertari Rigsby recently co-authored a Contributors Column in the Daily Business Review, "Make Sure Independent Contractors Are Classified Correctly." The column describes how the misclassification of employees as independent contractors leads to significant revenue losses for federal, state and local governments.

According to the authors, much of the time, employers do not intentionally misclassify workers. Unfortunately, many employers do not understand the criteria used to determine whether someone is an independent contractor or employee. They explain it does not help that the IRS and DOL each use different criteria. But, considering the concentrated effort on the part of these two government entities to catch and stop mistakes, employers must know the various standards.

"To prevent violations that could result in costly liability, employers should take the initiative to ensure that their workers are classified correctly," the authors write.