For business owners, the past year has been, in a word, crazy. And, to survive, many employers have transitioned their workers from traditional employees to other types of job classifications, like independent contractors. Indeed, to survive, for many employers this may have made the difference between staying in business and going out of business. However, in survival mode, some businesses may have committed illegal job misclassification that may expose them to millions in potential legal liabilities.
An example of job misclassification
To drive the point home of the potential expense of legal liabilities for job misclassification, there is a prime example out of Utah and Arizona. To save costs associated with payroll taxes and federal and state wage and safety laws, the company reclassified their construction worker employees as members of their limited liability company.
However, after a federal investigation, the government found the company committed illegal job misclassification. As a result, the company was on the hook for $700,000 in penalties and back payments, in addition to having to pay attorneys and other experts to defend themselves in this business litigation, which may have brought that total well into the millions.
The potential scope of the issue
In 2009, the GAO (Government Accountability Office) revealed that job misclassification affected 3.4 million employees and lost federal revenue loss of $1.6 billion in 1984 alone. The GAO found that in years after (2000 to 2006) still ranged from 100,000 workers to nearly 160,000 workers, meaning many businesses still had huge potential legal liabilities looming on their books.
The takeaway for local business owners
For Langhorne, Pennsylvania, business owners looking to avoid business litigation based on job misclassification, call an attorney immediately. An attorney can go through one’s business to ensure that potential litigation liabilities are reduced, especially those related to job misclassification.