In today’s workforce, it’s tempting to classify workers as independent contractors (1099) to save on payroll taxes, benefits, and administrative overhead. But if your company is treating those workers like employees—setting their schedules, directing their work, or requiring them to use your tools or systems—you could be walking straight into a legal and financial minefield.
What’s at Stake?
The IRS and state labor agencies are cracking down on worker misclassification, and the penalties can be severe. Here's what your business could face if you're caught:
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Back Taxes & Penalties: you may owe unpaid Social Security, Medicare, and unemployment taxes—plus interest.
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Fines: the Department of Labor can issue fines for wage and overtime violations.
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Lawsuits: misclassified workers can sue for unpaid benefits, wrongful termination, and more.
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Audits: a single misstep can trigger wide-ranging investigations.
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Reputational Damage: non-compliance can hurt your brand and future hiring efforts.
Even if it's unintentional, misclassification can carry serious consequences. And the laws? They vary by state and are constantly evolving.
Common Signs of Misclassification
You might be misclassifying workers if:
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You control when, where, and how they work.
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They rely solely on your business for income.
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They don’t offer services to other clients.
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They use your equipment or tools.
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The role is long-term, ongoing, or full-time in nature.
How Austin Nichols Technical Temporaries Can Protect You
We take the guesswork out of compliance.
As your Employer of Record (EOR) for temporary workers, Austin Nichols:
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Classifies workers properly (as W-2 employees, not 1099s)
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Manages payroll, tax withholding, and unemployment insurance
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Ensures full compliance with federal and state labor laws
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Reduces your legal liability and administrative burden
Additionally:
- We cover employee benefits, legally required and optional, saving you the time and cost associated with labor.
You get the flexibility of contract labor without the legal risk and usually save money in the process.
Stay Flexible—Without Cutting Corners
Worker misclassification is a costly mistake. With Austin Nichols as your partner, you don’t have to risk fines, audits, or legal issues to maintain a nimble workforce.
Contact us today to learn how we can protect your business and simplify your temporary staffing needs.