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May 13, 2010
Damage Resulting from Misclassifications of Workers in Your Organization

Maria Anastas discusses the damage of worker misclassification in a BLR webinar entitled ‘Employee versus Independent Contractor: Where’s the Line? How to Make the Proper Call and Stay Out of Court’. She explains that employers may be liable for taxes and that there are steps to requesting an Internal Revenue service (IRS) determination. She also provides the following details regarding tax liability:

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  • The employer may be liable for taxes required under the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), a certain percentage of wages subject to income tax withholding, and penalties
  • The potential liability associated with misclassification of multiple workers can be staggering

When in doubt about the status of a particular worker or class of workers, an employer or a worker may request an IRS determination preapproval by filing form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. A Form SS-8 determination may be requested only to resolve federal tax matters. It may be more prudent to have your legal counsel conduct an internal audit first.

Maria Anastas is a partner in the San Francisco office of law firm Ogletree, Deakins, Nash, Smoak & Stewart, PC (www.ogletreedeakins.com ). She represents employers in labor and employment law matters exclusively, with a primary emphasis on traditional labor matters. She also devotes a substantial portion of her practice to providing employers with practical advice on a wide variety of employment law issues. She can be reached at maria.anastas@ogletreedeakins.com.

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