From Pessin Katz Law, P.A. – JDSupra. — “Whether a worker is classified as an “employee” as opposed to an “independent contractor” or an “exempt” employee as opposed to a “nonexempt” employee can have a significant impact on an employer’s bottom line. Generally, an employer must withhold income taxes and withhold and pay Social Security and Medicare taxes, as well as unemployment tax on wages paid to an employee, but does not need to withhold or pay any taxes on payments to independent contractors. An employer does not have to pay overtime to an exempt worker, but does have to pay overtime to a nonexempt worker. While classification of a worker as an independent contractor and an exempt worker can save an employer a significant amount of money, misclassification of a worker can cost the state and federal government a significant loss of revenue. At a time when every tax dollar counts, the IRS and other state and federal agencies are launching initiatives aimed at business owners to stop and correct misclassification. Along with back taxes that will be owed, the penalties can also be severe…”
Read the full story at Misclassification of Workers: An Attempt to Save Could Cost Your Business A Bundle
