{"id":12586,"date":"2017-07-21T09:40:47","date_gmt":"2017-07-21T13:40:47","guid":{"rendered":"https:\/\/gtm.com\/household\/?p=12586"},"modified":"2020-03-05T11:24:57","modified_gmt":"2020-03-05T16:24:57","slug":"penalties-misclassifying-domestic-worker","status":"publish","type":"post","link":"https:\/\/gtm.com\/household\/penalties-misclassifying-domestic-worker\/","title":{"rendered":"Penalties for Misclassifying Your Domestic Worker"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-21606 size-large\" src=\"https:\/\/gtm.com\/household\/wp-content\/uploads\/Penalties-Misclassifying-Domestic-Worker-1024x768.jpg\" alt=\"Penalties-Misclassifying-Domestic-Worker\" width=\"1024\" height=\"768\" srcset=\"https:\/\/gtm.com\/household\/wp-content\/uploads\/Penalties-Misclassifying-Domestic-Worker-1024x768.jpg 1024w, https:\/\/gtm.com\/household\/wp-content\/uploads\/Penalties-Misclassifying-Domestic-Worker-980x735.jpg 980w, https:\/\/gtm.com\/household\/wp-content\/uploads\/Penalties-Misclassifying-Domestic-Worker-480x360.jpg 480w\" sizes=\"(min-width: 0px) and (max-width: 480px) 480px, (min-width: 481px) and (max-width: 980px) 980px, (min-width: 981px) 1024px, 100vw\" \/>For household employers, worker classification refers to whether a worker is classified as an\u00a0<em>employee<\/em>\u00a0vs.\u00a0<em>independent contractor<\/em>\u00a0for federal and state employment tax purposes. It is very\u00a0important that an employer knows the difference between the two, so that both parties\u2019 taxes are filed properly and you can avoid the penalties for misclassifying your domestic worker.<\/p>\n<p>The cost of misclassification will depend on several factors, such as how many employees are misclassified, how much extra money they would have been paid if properly classified, how the misclassification is discovered, and how your employees react to it.<\/p>\n<p>Generally, if an employee goes to the federal Department of Labor and says they have been misclassified, the DOL will likely investigate. Any employee who the DOL determines should have been paid overtime in the last two years will be found to have been underpaid, and the employer will owe that money to the employee now (or three years\u2019 worth if the <a href=\"https:\/\/webapps.dol.gov\/elaws\/whd\/flsa\/14c\/20i.htm\" target=\"_blank\" rel=\"noopener noreferrer\">misclassification is found to be \u201cwillful\u201d<\/a>). The employer will also owe them liquidated damages equal to the amount of money owed. So, if an employee should have been paid $2,000 in overtime, the employer will owe them $4,000. The employer will also owe taxes on those wages and interest on those taxes.<\/p>\n<p>Additionally, many states have their own <a href=\"http:\/\/www.employmentlawfirms.com\/resources\/employment\/overtime-pay\/state-overtime-laws.htm\" target=\"_blank\" rel=\"noopener noreferrer\">overtime laws<\/a>, and in most cases the employer can be held liable under both federal and state law, meaning not only would the employee be owed double under the FLSA, but also any liquidated damages under state law (which could easily triple the original amount). And if you are in a state with late payment penalties, you could owe up to 30 days\u2019 worth of the employee\u2019s pay on top of the already discussed damages. There\u2019s also a very good chance that the employer will be held liable for any related attorney\u2019s fees \u2013 both your own and the employee\u2019s.<\/p>\n<p>Finally, there are potential federal civil penalties of $1,894 per violation (generally one penalty per misclassified employee), state penalties (which will vary), and in some cases the potential for jail time. As soon as judgment is rendered in favor of the employee, statutory interest will begin to accrue on the amount owed \u2013 generally 10% per year.<\/p>\n<p>As you can see, the costs associated with misclassification are steep. Download our <a href=\"https:\/\/gtm.com\/household\/resource-center\/eeoc-independent-contractor-checklist\/\" target=\"_blank\" rel=\"noopener noreferrer\">Independent Contractor Checklist<\/a> to ensure that you are properly classifying your domestic worker so you can avoid any of the penalties listed above. <a href=\"https:\/\/gtm.com\/household\/contact-us\/\" target=\"_blank\" rel=\"noopener noreferrer\">Contact us<\/a> for more information at (800) 929-9213.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>It is very\u00a0important that an employer knows the difference between worker classifications, so that taxes are filed properly and you can avoid the penalties for misclassifying your domestic worker.<\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[76,80],"tags":[124,15,27],"class_list":["post-12586","post","type-post","status-publish","format-standard","hentry","category-hiring-an-employee","category-tax-wage-laws","tag-classification","tag-dol","tag-hiring-practices"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What are the Penalties if You Misclassify a Domestic Worker?<\/title>\n<meta name=\"description\" content=\"Misclassifying a domestic worker as an independent contractor is costly. 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