Question

Please explain what is employee misclassification. Why is it important to learn it as an CEO/emloyer of a company?

Answer 1

Employee misclassification is the process by which workers are labeled as independent contractors rather the company employees in order to avoid paying taxes, paying unemployment perks and other benefits which otherwise are mandated to be extended.

It is important to learn as an employer as:

• It helps to reduce labor cost for the company
• It helps to build in flexibility in system in terms of worker hiring and lay off. So, capacity can be adjusted to demand
• As there are different laws applicable for independent contractors, it is crucial to learn and adhere to the same