Freelance work is expected to grow by nearly 180% in the next 10 years. Misclassifying workers can trigger IRS or state tax audits, investigations by the US Department of Labor, as well as lawsuits which can result in hefty fines, penalties, business interruptions, and bad press for your company.
Failure to provide W-2 forms for an employee can lead to back taxes of up to 41.5% of an employee’s wages for up to three years. If the misclassification is determined to be intentional, corporations can face fines as high as $500,000 or even jail time.
IES has helped clients who have faced multiple misclassification settlements in the past. We work with clients to create robust vetting and onboarding processes and help tighten up independent contractor agreements.