What repercussions if any does an employer face if they incorrectly identify an employee as an independent contractor?

For instance, the employer could be subjected to penalties that include 20\% of all of the wages paid, plus 100\% of the FICA taxes, both the employee’s and the employer’s share. Criminal penalties of up to $1,000 per misclassified worker and one year in prison can be imposed as well.

What options do you have if you are misclassified as an independent contractor instead of an employee?

File an Unemployment Insurance Claim. If you’ve been fired or laid off by your employer, file an employment insurance claim with your state unemployment agency. Explain that you’ve been misclassified as a contractor instead of an employee, and the agency will investigate.

How do I know if I misclassified as an independent contractor?

If your employer controls how long your lunch is, how many hours a day you have to come into the office, how many sick days or vacations you have, how the work is done, when the work is done, and where the work is done then you are being misclassified as an independent contractor.

How do I report an employee misclassification?

If employee misclassification is causing tax fraud, workers can anonymously report their employers to the IRS by filing Form 3949-A. If workers would like the IRS to make a determination about their worker status, they can file the non-anonymous Form SS-8.

What happens if you are misclassified as an independent contractor?

Being misclassified as an independent contractor instead of an employee for legal and tax purposes can be very costly. Among other things, it means that you’ll: have to pay all your Social Security and Medicare taxes out of your own pocket (employers must pay half of these taxes for employees, but not independent contractors

Do you have a misclassified employee working for You?

Your contractor receives an hourly pay. The work provided by your contractor is an integral part of your business. If more than one of these signs describes your relationship with your subcontractors, watch out! You may actually have a misclassified employee working for you. And you are definitely going to want to keep reading…

Is your subcontractor an employee or a contractor?

But if your subcontractor only works on your projects and is economically dependent on you, he is most likely a misclassified employee. The final factors that determine an employee vs contractor classification have to do with the relationship between you and your worker.

What to do if my employer classifies me as a contractor?

First, you can try to talk to your employer to see if it will review your classification and reclassify you as an employee. Explain that you think you’ve been wrongly classified as an independent contractor. At the very least, you should get an explanation as to why they think you are a contractor, instead of an employee. Get the IRS Involved.