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Worker Misclassification
 

Worker Misclassification

The Internal Revenue Service (IRS) may conduct a worker classification audit to determine if an employer properly classified their workers as employees or independent contractors. States also conduct worker classification audits. In California, this is handled by the Employment Development Department (EDD). After a worker is reclassified from an independent contractor to an employee, the business will be responsible for unpaid payroll tax, penalties and interest.