Resist the temptation to misclassify employees as contractors — Business Management Daily: Free Reports on Human Resources, Employment Law, Office Management, Office Communication, Office Technology and Small Business Tax Business Management Daily

You’re writing your unemployment insurance checks, paying workers’ compensation premiums and remitting payroll taxes to the government when a bright idea occurs to you: If only your employees were independent contractors, you wouldn’t have all these expenses.

The Illinois General Assembly understood the appeal of that daydream—and took action to slap you back to reality.

The Illinois Employee Classification Act took effect Jan. 1, 2008. The law gives the Illinois Department of Labor (IDOL) expanded authority to crack down on employers that misclassify employees as independent contractors.

In particular, IDOL investigators are looking at the construction industry, where they believe the practice is widespread. Businesses even remotely related to construction (e.g., truckers, suppliers, consultants) will face greater scrutiny. But the increased attention won’t necessarily stop with construction companies. The IDOL ...(register to read more)

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D. Perkins February 12, 2012 at 7:27 pm

All of these comments on the various sites that I have looked at are good at pointing out the laws and rights of workers BUT in these really tough economic times the only winner when someone turns an employer in to the IRS or makes a complaint about misclassification as an indedpendent contractor is the IRS by collecting what should rightfully been paid to them and attorneys. None address the fact that the employer gets nothing to speak of and is most likely out of a job to boot. He/She has cut their own throat. Believe me there are more than just the construction industries to look at. Just because a company is small in size doesn’t mean that they are incapable of pulling in LARGE AMOUNTS OF CASH. Remember if it doesn’t go into a bank account it doesn’t show up anywhere. So somone who is paying an employee cash has an employee who doesn’t show up on the books anywhere. Neither does that cash. Hunt around the internet and you can find businesses that are in fact quite capable of paying payroll taxes and other employee government required costs (FUTA/SUTA and UC come to mind) but are particularly fond of LLC set ups where the practice is next to impossible to track if not impossible. Ah yes the IRS
can trip over the big ones like construction but apparently can’t see the small really lucrative ones. No I didn’t overlook the citizen taxpayer as a victim just that they are not as closely related in this tax evasion as is the victim employee.

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