Are you Classifying Your Workers Correctly?

What are the legal implications of hiring contractors vs. employees?

The distinction between a contractor and an employee comes down to one critical factor: control.

Misclassifying a worker can have serious legal and financial consequences.

Employees are entitled to benefits such as workers' compensation, overtime pay, and unemployment insurance—benefits that contractors do not receive benefits that contractors do not receive.

If a worker is misclassified, your business could face IRS penalties, back taxes, and steep fines at the state level.

And with each state applying its own test for classification, compliance becomes even more complex. 

To reduce your risk: 

• Understand both federal and state classification guidelines 

• Consult with legal counsel when needed 

• Use clear, written contracts with independent contractors 

• Regularly audit your worker classifications 

Unsure about how these regulations apply to your business? 

We can help. 

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This document is designed for general information only. The information presented in this document should not be construed to be formal legal or tax advice nor the formation of a lawyer/client relationship. 

For more information on this and other topics, please contact Kevin via any of the channels listed below:

📧 kevin@kmckernan.com  | 📞 718-317-5007