Employee Misclassification Fines Big or Small Are Painful!

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How Can You Avoid The Possible Fines and Penalties Associated With Workforce Misclassification?

I just read an article by Martha Neil regarding the 17 million dollars in OT, penalties and back wages ZipReality will need to pay as a result of a misclassification issue...  That’s big and quite painful! The largest in California history of it's kind.

Corporations today know of the risks regarding misclassification, (if they don't they should!) but many feel that they're not a target and this sort of penalty won’t happen to them.  That's not necessarily true.  The perception that they are small and will be the last on the list to be placed under the microscope, audited and fined is also a misconception. Big or small, government needs and wants that money. Big companies get hit with huge fines and smaller corporations get hit with smaller penalties. Relatively speaking, the pain is the same.

How can your company avoid the misclassification risk and the associated penalties?

First a quick analysis of your present situation should occur:

1. What % of my workforce is permanent, temporary, and contractual?
2. When, why and how do I hire my temps?
3. What is the average length of their assignment?
4. When, why and how do I hire my contractors?
5. Who is and how are we on boarding them, managing them, paying them?
6. Are we aware of the latest regulations regarding the proper management and hiring of our temps and contractors?
7. If we are at risk, how much would this cost the company?
8. What are the benefits or risks of managing them internally versus using a professional expert vendor?
9. What service lines are my temps and contractors in?
10. Do we have the adequate insurance in place, do they?
11. Are we classified properly with WSIB?

The second part of the process is a customized plan. The answers to these questions should give you a better idea of your current status to then take action with an effective plan to mitigate or even eliminate the misclassification risk. By the way, you may also find that you save your company a great deal of money in the process as your administration and workforce processing is streamlined.

Who can help? A PEO organization can definitely assist. Remember, even if you are considered a small or medium business the cost of non compliance will hurt you just as much as it hurts big corporations on a relative basis. If you're at all uncertain of where your company is on continuum of misclassification risk, reach out for help, it may be the best money you spend in HR this year.

We're here to help. If you have any questions or doubts, get them cleared up now and avoid the financial risks.