Employers may also face liability for worker's health care costs and other "insured" benefits. For example, a misclassified worker who suffers an on-the-job injury may not be covered by worker compensation insurance, in which case the employer might become liable for the direct costs associated with the worker's injury. Similarly, if the employer's regular employees are eligible for other benefits, a misclassified worker may claim eligibility for those same benefits, which could result in a sudden and catastrophic cost to the employer. Finally, in some cases, when misclassified workers are added to the employer's normal headcount, the employer may become covered by antidiscrimination legislation, which can also expose the employer to additional liabilities.
Recently, IRS has begun cracking down on misclassification. Often, this leads to multi-agency investigations that result in a grand jury indictment against the employer and its principals. All of this suggests that prudent employers will carefully consider the foregoing factors when making classification decisions.