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Internal Revenue Services and the Workplace

November 26, 2014
Michelle W. Johnson

Reprinted with permission from InsideCounsel Labor & Employment Digest

The IRS’ Voluntary Classification Settlement Program (VCSP) provides a way for employers who have misclassified workers as independent contractors to get a fresh start by paying the IRS just over 1 percent of a worker's previous year's compensation. To be eligible, a company can't be the target of an IRS or Department of Labor audit, must have filed 1099s for the worker, and must consistently have treated the worker as a nonemployee. But there are risks because the VCSP does not absolve an employer of potential liability for misclassification under the FLSA or other laws. Employers should carefully evaluate whether the voluntary settlement program is right for them.

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