A willful misclassification of workers by an employer may result in harsh sanctions under the Fair Labor Standards Act of 1938 (FLSA).These may include imprisonment and a fine of up to $10,000.

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An employer who maintains employees has the responsibility to pay Social Security (FICA), the FICA excise tax, Railroad Retirement Tax Act (RRTA) withholding amounts, federal unemployment compensation (FUTA), Internal Revenue Service (IRS) federal income tax withholdings, Medicare, and state taxes. Employers may intentionally misclassify employees in order to avoid these other costs and liabilities. A willful misclassification under the Fair Labor Standards Act of 1938 (FLSA) may result in imprisonment and up to a $10,000 fine, imposed by the Department of Labor.

A Willful Misclassification of Workers by an Employer May Result