What is Employment Misclassification

Misclassification of workers occurs when an employer incorrectly classifies workers as independent contractors rather than employees.

Misclassification creates problems for workers. They lose access to unemployment insurance benefits, workers compensation and they are responsible for the full share of social security tax and individual income tax.

Employers that misclassify workers may not be making appropriate withholdings or tax payments for their employees. This includes:

  • Withholding Tax
  • Social Security
  • Unemployment Tax
  • Workers Compensation

Intentional misclassification of workers is illegal and constitutes tax and insurance evasion. Employers engaging in this practice may be subject to significant penalties and fines.