From the course: Hiring Contract Employees
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A misclassification scenario
Most employers who hire independent contractors don't think about the downside of a misclassification problem until it's too late. Let's walk through a scenario. Assume one of the misclassified drivers causes an automobile accident while doing work for your company. Assume that because of this accident, he or she is disabled and unable to go back to work. Also assume people in the other car were seriously injured. Under this scenario, the company will be sued for the negligence of the independent contractor based on what is known as respondeat superior liability. It'll be argued that the company in fact controlled their work and that the independent contractor status was a subterfuge to avoid liability. Since the employee is now unemployable, the inevitable unemployment and worker's compensation claims are likely to follow claiming the individual should have been classified as an employee. If the independent contractor is found to be an employee and the company does not have worker's…
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