Question

Staffing firms that classify contract workers as "independent contractors" expose whom to liability for unpaid employment taxes?

1) The staffing firms
2) The contract workers
3) The government
4) The clients of the staffing firms

Answer 1

Staffing firms that classify contract workers as "independent contractors" expose themselves to liability for unpaid employment taxes.

Step-by-step explanation:

The staffing firms that classify contract workers as "independent contractors" expose themselves to liability for unpaid employment taxes. These staffing firms are responsible for correctly classifying workers and ensuring that the appropriate employment taxes are paid.

When contract workers are misclassified as independent contractors, the staffing firms may avoid paying certain taxes, such as Social Security and Medicare taxes, which are typically shared between employers and employees.

However, if the government determines that these contract workers should have been classified as employees, the staffing firms can be held liable for the unpaid employment taxes, penalties, and interest.