The United State Department of Labor (DOL) has partnered with almost 20 States to pursue employers that engage in misclassification of employees as independent contractors and collect unpaid overtime, payroll taxes, benefits and penalties that may be due.
The financial incentive to treat persons who perform services as independent contractors is significant. While employees are entitled to wage protections such as minimum wage and overtime pay, and in some cases leave protection such as FMLA, true independent contractors are not. In addition, employers must pay State and federal payroll taxes, unemployment taxes and provide workers compensation coverage for employees, but not for independent contractors. More recently, as the Affordable Care Act is implemented, certain employees classified as “full-time” under that statute are also to receive mandatory health care insurance coverage.