Arent Fox partner Darrell Gay was published in the September 29, 2011 edition of Employment Law360 in the publication’s “Expert Analysis” section. Darrell’s article, titled “Reclassify Workers, Avoid IRS Audits,” analyzes the potential impact of a recent US Internal Revenue Service announcement of a voluntary reprieve for businesses that fear facing an IRS worker classification audit. Darrell writes:

The Obama administration suspects that between 10 percent and 30 percent of U.S. companies misclassify their workers. According to a 2009 report from the Government Accountability Office, employers who misclassified workers as nonemployees or independent contractors, rather than employees, cost the federal government roughly $2.72 billion in unpaid federal taxes, in addition to losses to local and state agencies, such as local employment taxes and unemployment taxes. While employers may realize a substantial savings by classifying workers as nonemployees, an IRS audit based on worker misclassification could cost employers a lot more in interest and penalties in the long run.