What are the penalties and costs of misclassifying employees? The answer will depend on a number of factors, such as how many employees are misclassified, how much extra money they would have been paid if properly classified, and whether or not lawyers or regulatory agencies get involved.
Generally, if an employee goes to the federal Department of Labor (DOL) and claims that they’ve been misclassified, the DOL will investigate. The organization could end up owing money to the employee, as well as government taxes on the wages in question, and interest on the taxes. Read More to learn about additional costs and penalties.