From the Alton Daily News —
If someone is an independent contractor, they will be issued a Form 1099, and will be responsible for paying income tax and Social Security and Medicare tax. If someone is an employee, the employer withholds taxes, pays an employer’s share into Medicare and Social Security, and pays into worker compensation and unemployment insurance funds.
Jay Rowell, director of the Illinois Department of Employment Security, says misclassification allows violators to under-cut their honest competitors by 25 to 30 percent, and that’s not all. “The law-abiding employer is going to end up covering the cost for the unemployment insurance for that employer that’s misclassifying, because we’re still gonna pay out benefits, because that person’s an employee, but that misclassifying employer isn’t paying into the system,” he said.
Read the full story at State Against Worker Misclassification
- Addressing wage theft, misclassification (thegazette.com)
- The Tax Risks of Misclassifying Employees – The National Law Review (natlawreview.com)
- Dangers of misclassifying an employee as an independent contractor … – Lexology (registration) (lexology.com)