Worker Misclassification

Definition

Illegally classifying employees as independent contractors to avoid taxes, benefits, and labor law compliance.

Related Terms

Self-employed worker who provides services to clients without being an employee, responsible for their own taxes and benefits.

ABC Test

Employment classification test determining if a worker is an independent contractor based on control, business, and custom criteria.

FAQs

What happens with worker misclassification?

Companies face back taxes, penalties, and lawsuits; workers may receive back pay and benefits.

Similar Terms

NDA (Non-Disclosure Agreement)

Legal agreement preventing sharing of confidential information about a client's business.

Contract

Legal agreement outlining project terms, payment, deliverables, and responsibilities.

LLC (Limited Liability Company)

Business structure providing personal liability protection while maintaining tax flexibility.

Sole Proprietor

Simplest business structure where individual and business are legally the same entity.

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Last updated: January 18, 2026

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