Are Your Temporary Workers Misclassified?

If you run a business, you know there are myriad steps you must take to remain competitive and profitable, and to protect your business from unexpected expenses and interruptions. One of the most critical things for any business to do is to secure a comprehensive Massachusetts Business Insurance Policy. You’re probably already aware of how important that is. Another critical step you need to take is less obvious. If you use temporary workers, you need to classify them as such and pay taxes on them.
 
IRS Crackdown
 
The Internal Revenue Service routinely audits businesses to identify those that erroneously classify temporary workers as independent contractors or freelancers. Essentially, legitimate freelancers and contractors perform work for you on an occasional basis and have no role within your business other than providing an external product or service. Temporary workers, on the other hand, work directly for your business. They may work only occasionally or seasonally, but if they work directly for you for a long period of time, regardless of how infrequently, they are temporary workers, not freelancers or contractors. If you classify temporary employees as contractors (meaning you fail to pay payroll and social security taxes on them) and the IRS finds out, you could be subject to stiff fines.
 
Even if you aren’t intentionally trying to defraud the government by incorrectly classifying workers, doing so may violate both the tax code and fair-pay requirements and lead to time-consuming red tape and expensive fines. Do you incorrectly classify temporary workers? Are you unsure of the answer? It’s in your best interest to talk to an accountant or labor attorney to find out. If you’re unsure if your business insurance policy is adequate, we can help. Call us today at Metro Boston Insurance Agency, 617.884.5480 and we will make sure you’re protected.