Independent Contractor’s Attempt to Collect Unemployment Prompts Audit, Penalties
Think you can fly under the radar for misclassifying employees? Information can come to light in a variety of interesting and unforeseen ways. An independent contractor at a New Jersey company filed for unemployment after her assignment ended. Her attempt to do so raised a red flag at the New Jersey Department of Labor and Workforce Development, who promptly audited the employer in question. The independent contractor was found to have been misclassified and should have been a W-2 employee. As a result, the Company was severely penalized and fined for nonpayment of employment taxes, and the government continues to scrutinize the employer every year to ensure that they are in compliance with wage and hour laws.
This is a cautionary tale. State government is poised to enhance penalties for violators of wage and hour laws ( See our entry entitled “New Jersey Imposes Harsh Penalties on Repeat Wage and Hour Offenders” entry dated today) so it is very important that you review your workplace practices and policies to make sure you are in compliance.