As an employer, one of your most important responsibilities is properly classifying workers as either employees or independent contractors. Properly classified independent contractors can save your enterprise money, especially in the form of saved payroll taxes and employee benefits. On the other hand, misclassifying workers as independent contractors can be extremely costly. Later, we'll talk a little about how to protect yourself from misclassification lawsuits.
Consider the case of home improvement leader Lowe’s Home Centers. Last January, Lowes agreed to pay out $10 million in a settlement agreement of a class action suit brought by home improvement and installation workers who were improperly classified as independent contractors. The court found that the workers should have been classified as employees due to the fact that “Lowes had the right to control, and did control, all aspects of installation jobs.”