Key Takeaways
- Classification depends on behavioral, financial, and relationship tests.
- Misclassification: 15-20% back taxes plus 25-50% penalties.
- Hire only licensed contractors with own business entity and insurance.
- Consult employment attorney when classification is uncertain.
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Test Your Knowledge
1.What determines whether a worker is an employee or independent contractor?
2.What is the penalty risk for misclassifying employees as independent contractors?