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Worker Protection
What is worker misclassification?
Worker misclassification occurs when employers improperly designate a worker as an independent contractor rather than as an employee.
Independent contractors:
- Typically are hired for short terms.
- Generally use their own materials and methods.
- Usually create a product by a scheduled deadline.
- Pay all of their own Social Security and Medicare taxes.
- Have no income taxes withheld, but remain responsible to pay them in full.
- Are not covered by workers’ compensation or unemployment insurance.
Employees:
- Typically are hired for a longer term on an established schedule.
- Are subject to the direction and control of their employer in performing their work.
- Usually use the employer’s materials to do their work.
- Half of their Social Security and Medicare taxes are paid by employers, who also pay their premiums for workers’ compensation and unemployment insurance coverage.
- Federal, state and local income taxes are withheld by employers.
When employees are illegally misclassified as “independent contractors,” they lose out on money and benefits. State and local government entities lose hundreds of millions of dollars each year in revenue, which is unfair to taxpayers. Businesses who illegally misclassify employees do so because they pay independent contractors less, which gives them an unfair and illegal advantage over their competitors.
Report potential violations to the Ohio Attorney General's Office at (800) 282-0515. The information you provide is important because it will allow the state to identify and recover unpaid taxes, workers’ compensation premiums and unemployment compensation premiums.
The Attorney General’s Office is conducting joint investigations of companies with the Ohio Department of Job and Family Services, the Ohio Department of Taxation and the Ohio Bureau of Workers’ Compensation.