Classify Workers Properly to Avoid Expensive Penalties

Businessman holding money in hands

There is a fine line between being identified as a contractor or employee on the job.

April 25, 2022
Martin C. McCarthy - Construction Executive

Business owners must carefully consider how the people working for them are classified. There is a fine line between being identified as a contractor or employee on the job. Owners must know the difference to avoid being penalized.

Worker classification determines if an employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Businesses do not have to withhold or pay any taxes on payments to independent contractors. The earnings of a person working as an independent contractor are subject to self-employment tax.

There are federal and state rules for determining if a person is an employee or contractor. Employers must follow both sets of guidelines when classifying workers.

Reprinted courtesy of Martin C. McCarthy, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.

Mr. McCarthy may be contacted at marty.mccarthy@mcc-cpas.com



714.701.9180

Arrange No Cost Consultation

 

Construction Defect Journal is aggregated from a variety of news sources, article submissions, contributors, and information from industry professionals.

No content on this site should be construed as legal advice or expert opinion. By viewing this site you agree to be bound by its terms and conditions

 

Copyright 2022 - Construction Defect Journal – All Rights Reserved