Cheating Companies

Posted on: April 12th, 2010 by

Rockville CPASome labor-force experts predict that 50% of jobs created in the economic recovery will go to contractors, consultants, or other temporary employees.  The reason being, that they can cost up to 30% less than full time staff – good news for employers.  Studies conducted by the IRS, however, suggest that thousands of companies may be calling workers “contractors” when they are actually full time employees.

An independent contractor controls when and how he or she works, rather than taking directives from an employer.  By incorrectly classifying workers, businesses get all the advantages of full-time employees, while saving millions of dollars on taxes.  This also makes the employee ineligible for worker’s compensation, unemployment insurance, and medical leave.  To combat this increasing problem, the IRS is expanding company audits and states are announcing state level initiatives to increase fines and implement criminal sanctions for violating companies.



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