The Danger of Misclassifying Workers

By: Terry Bennett

Many employers misclassify workers as independent contractors. The reasons are obvious: no duty to withhold taxes, no duty to pay Social Security or Medicare, no duty to provide workers’ compensation coverage, no duty to pay unemployment and no duty to provide any employee benefits. But the cost of misclassification can be high.

There can be personal and individual liability for the employer’s failure to pay withholding taxes for employees that are misclassified. The IRS looks at behavior control, financial control, and the type of relationship between the employer and the independent contractor. Many employers are at risk for the detection of misclassified workers. The IRS is focusing its resources on auditing employers to determine if they are properly classifying their workers.

Misclassified workers are often denied access to critical benefits and protections such as family and medical leave, overtime, minimum wage and unemployment insurance. Not only are employees cheated, but it also generates substantial losses to the treasury and the Social Security and Medicare funds, as well as state unemployment insurance and workers compensation funds.

At Skeeters, Bennett, Wilson & Humphrey, we can help businesses with their classification of workers, whether it relates to independent contractors, part-time/full-time employees, or the employer’s responsibility concerning the many Federal and State requirements as it relates to employees.



Attorney Terry BennettTerry joined the practice in 1974. His areas of focus include personal injury law, real estate law, probate law, estate planning, business law, corporations, and adoptions. He is admitted to practice before the United States Supreme Court, United States Court of Appeals 6th Circuit, United States District Court Western District of Kentucky, United States Court of Military Appeals, and all Kentucky courts.

A Hardin County native and former Army office in the Judge Advocate General (JAG) Corps, Terry graduated from William and Mary in Virginia with an undergraduate degree in government. He received his Juris Doctorate from Wake Forest Law School in Winston Salem, North Carolina, where he graduated with honors.