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4 Steps to Avoid Misclassification Penalties (and Confusion)

by Aug 31, 2021Blog, CMMA Blog, Uncategorized0 comments



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The misclassification of employees as independent contractors continues to be a tremendous problem facing businesses nationwide. Noncompliance – whether stemming from mistaken misrepresentation or actual underhanded and/or criminal behavior – regularly costs employers a fortune in fees and fines, not to mention other significant consequences.

You can avoid misclassification penalties with these four steps:

  1. Know the difference. Making an accurate distinction between employees and independent contractors is what the whole ball of wax teeters on. By and large, independent contractors do not receive training or performance evaluations from their hiring firm, and they do not wear uniforms. Independent contractors, by definition, determine the specifics of how they do their job and utilize their tools of the trade.
  2. Never-ever ever consider workarounds. Misclassifying employees to avoid paying for benefits violates tax and employment law. Leave no room for accusation. Do everything in your power to avoid finger-pointing and claims of dishonesty when implementing an on-demand crew. Read up on independent contractor laws, stay current, and know every single standard set forth by your jurisdiction. Follow them to the letter.
  3. Keep meticulous written records: Make certain when enlisting the services of an independent contractor that your business relationship is clearly and explicitly defined and explained on paper. Signed contracts go a long way in confirming your due diligence if your company is ever audited.
  4. Get help. Hiring an Employer of Record not only helps you strengthen your workforce and streamline your payroll processes, but it can ensure that you avoid misclassification penalties and prevent litigation in the long run.

Maslow Media Group has the answers to important questions regarding payroll, contractors, compliance, and more. We regularly help clients avoid misclassification penalties, taking full responsibility for employment, compliance, and tax laws while your employees continue to work for you. As an Employer of Record , our team offers comprehensive solutions and a compliance safety net for small businesses. Contact us to learn more about our services today.

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