Worker Misclassification: Who Should Be an Employee?

Originally published by the following source: SBC MagazineSeptember 23, 2019
by Mindy Caldwell with contributions from NFC Staff


While the national spotlight has been Uber and Lyft in light of California’s recent “gig-worker” bill, the issue of work classification is an important subject for all business owners to understand.  According to the National Federation of Independent Business (NFIB), “Business owners should take note: Independent contractor misclassification claims are present in virtually every industry in the U.S. regardless of company size.”

A recent example reminds us that the construction industry is often targeted for its use of independent contractors. On September 10, the District of Columbia’s Attorney General announced the release of a report on payroll fraud in DC’s construction sector. AG Karl Racine claims that the report demonstrates how “District construction companies hurt workers, cheat taxpayers, and undercut law-abiding competitors when they illegally misclassify workers as independent contractors.”

Michigan’s Attorney General also recently announced her support of a package of bills introduced in her state’s legislature designed to create tougher penalties for business owners and others who defraud employees. In April, AG Dana Nessel created an enforcement unit to crack down on payroll fraud stating, “Payroll and tax fraud have been allowed to go on under the radar for far too long, and it’s a crime that robs all of us.”

A representative from the National Federation of Independent Business (NFIB) points out that “while there certainly are bad actors who attempt to game the payroll system, some mistakes are simply a result of increasingly complicated payroll laws.” The hope is that, as legislation is made and lawsuits filed, a distinction is made between those who are breaking the law and those who make mistakes.

NFIB has a short video on this topic as well as a free guide to independent contractors. These resources lay out some simple questions you can apply to your business practices to determine how your company would fare in an audit.

Download Guide

Is the topic of worker misclassification affecting your business? Please share your insights with NFC staff at


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