Misclassifying workers isn’t just a small mistake—it can be costly.

Employers may face $50 fines per W-2 not filed, back withholding for Social Security and Medicare taxes, and 100% of the employer’s share of those taxes. If the IRS believes the misclassification was intentional, penalties could escalate to criminal charges, with fines as high as $500,000. On top of that, your workers’ compensation carrier may audit you for unpaid premiums. Bottom line: worker classification matters.

When in doubt, apply the Duck Test, check the ABC Test, and consult your CPA or attorney for guidance.