The federal government has been focusing a lot of their attention and resources on cracking down on the misclassification of independent contractors (IC). The Department of labor (DOL) has put a big effort into this in conjunction with the IRS. While they have never blatantly said so, the obvious reason for this crack down would result in more taxes.<\/p>\n
If you are an independent contractor you are considered a business owner for tax purposes, workers compensation payments, social security, Medicare and basically any programs or benefits afforded to actual employees. So for every person that is not actually an employee, the government could be missing out on money from those wages as well as from the company paying the person for their work.<\/p>\n
Businesses like to hire independent contractors because generally they cost less than an actual employee. Independent contractors are not entitled to overtime payments, meal and rest breaks, nor are they given any of the same employee benefits like paid time off or medical or dental coverage unless specified in their IC contract. Employers don\u2019t have to pay into that IC\u2019s social security, they don\u2019t have to file worker comp insurance for them and they don\u2019t have to worry about unemployment benefits either. Most importantly, the term \u201cwrongful termination\u201d would rarely apply regardless of circumstances as they were never actually employed by the company. This could be a breach of contract situation but that all depends on what was written in the contract.<\/p>\n