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1099 Worker Misclassification

Do you know your risk level?

USE THE IES CALCULATOR TO ESTIMATE

RISK LEVEL
LIABILITY
PENALTIES & FEES

Risk Calculator

Assess misclassification risk factors when using independent contractors.

Risk Calculator

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What is your Independent Contractor misclassification risk level? Use IES's interactive Risk Calculator for an assessment.

Approximately how many 1099 Independent Contractors does the organization engage annually?

Do any of the 1099 Independent Contractors perform the same work as your organizations W2 employees?

Yes
No

Does the organization determine the 1099 Independent Contractor's work hours, work location, and how the work is performed?

Yes
No

Select the state(s) where work is performed by 1099 Independent Contractors.

On average, what does your organization pay a 1099 Independent Contractor annually?

States Selected

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Why It's Important

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.

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