Legal Alert - Another Reason Not to Misclassify Employees
As reported in prior Snell & Wilmer publications (See September 2011 Workplace Word, October 2011 Workplace Word and January 9, 2013 Legal Alert), there are numerous reasons why employers need to ensure that they do not treat common law employees as independent contractors. Now, there is another risk for employers who misclassify employees.
As reported in our recent Navigating Health Care Reform Alert, employer shared responsibility penalties (commonly referred to as the “large employer play or pay penalties”) take effect on January 1, 2014 for employers with 50 or more full-time plus full-time equivalent employees. Under those rules, misclassifying employees puts employers at risk of having to pay an Internal Revenue Code Section 4980H subsection (a) or subsection (b) penalty, with respect to its group health plan, and the penalties can be quite significant.