How Employers Misclassify Employees

Let’s talk about something too many security companies are doing wrong — and it’s costing people big. If you’re a security officer getting paid on a 1099, but you wear their uniform, report to their supervisors, follow their schedule, and take orders from them… you’re not an independent contractor. You’re an employee. And legally, you should be classified — and protected — as one. But here’s what’s happening in too many small and mid-sized firms: To cut costs, avoid payroll taxes, skip unemployment insurance, and dodge workers comp coverage, some companies are misclassifying officers as independent contractors. That’s not just unethical — it’s illegal. Let’s be clear: to be a legitimate subcontractor in this industry, you must: • Hold your own security agency license • Carry general liability and workers comp insurance • Have your own EIN • Invoice the company you’re working for • Control your own officers, uniforms, and operations If you’re wearing their uniform, working their post, under their direction, with their clients — you’re not a contractor. You’re an employee. And here’s why this matters: When you’re misclassified, you lose legal protections — including: • Overtime pay • Unemployment benefits • Workers comp coverage • Employer-paid taxes • Proper wage protections If you get hurt? You’re on your own. If you get terminated? Good luck with unemployment. If the IRS audits them? You could be pulled into the mess. Security companies: Do it right or don’t do it at all. Officers: Know your rights. Don’t settle for shortcuts. At Arizona Preventive Crime Unit, we don’t play those games. We classify our people correctly, train them well, and treat this like the professional industry it’s supposed to be. Because cutting corners on paperwork eventually cuts into people’s lives. #SecurityIndustry #PrivateSecurity #security #EmployeeRights #SecurityProfessionals #IndependentContractorMisclassification #SecurityLeadership #W2vs1099 #SecurityCompliance #ArizonaSecurity #DoItRight #SecurityCompanyStandards

After nearly 3 years of research, our Human Rights Watch report 'The Gig Trap' is finally out. It documents how companies like Uber, Lyft, DoorDash, Instacart, Shipt, Favor Delivery, and Amazon Flex have created a business model that undermines labor rights & deepens inequality in the United States. While Uber reported $9.8 billion in net income in 2024 - its "strongest quarter ever" - the average wage of platform workers we surveyed in Texas was just $5.12/hour. That's 30% below the federal minimum wage. Workers are also excluded from social protections like unemployment benefits and compensation in the event of work related injuries. They face barriers to organizing, and are managed by opaque algorithms. When things go wrong, they're on their own. Why? At the heart of it all is the misclassification of workers as "independent contractors." This allows companies to bypass taxes & protections of formal employment - shifting the costs & risks of doing business onto workers & society at large. In Texas alone, we estimate that the state missed out in over $111 million in unemployment insurance contributions due to the misclassification of gig workers. As more people are drawn to platform work, federal & state governments should step up to guarantee workers the protections they are entitled to, and work with the International Labour Organization to establish a binding global standard for decent work in the platform economy. #ILC2025 📰 Read the report here: https://lnkd.in/d4tAE2Uz

𝗧𝗵𝗶𝗻𝗸 𝗧𝗵𝗮𝘁 𝟭𝟬𝟵𝟵 𝗦𝗮𝘃𝗲𝘀 𝗬𝗼𝘂 𝗠𝗼𝗻𝗲𝘆? 𝗧𝗵𝗶𝗻𝗸 𝗔𝗴𝗮𝗶𝗻. ⚠️ Misclassifying workers as independent contractors instead of employees might seem like a shortcut to lower costs. But here’s the truth: It can lead to IRS penalties, back taxes, interest... even lawsuits. And it's one of the most common mistakes small businesses make. 💬 “But I Thought They Were a Contractor...” We’ve heard this story before — many times. • You gave them a 1099. • They used your tools, worked your hours, and answered only to you. • You thought you were safe, until the IRS disagreed. Our clients often come to us after they've received a scary IRS letter or faced a state labor audit. The rules aren’t always clear, and the consequences are serious. The Cost of Getting It Wrong: ◾️ Back payroll taxes, Social Security, and Medicare ◾️ Penalties and interest (sometimes years’ worth) ◾️ Legal disputes, including worker misclassification lawsuits ◾️ Stress, anxiety, and possible damage to your business’s reputation ◾️ Loss of eligibility for certain credits and deductions This is more than a paperwork error—it’s a financial and legal risk. ✅ 5 Things Every Business Owner Needs to Know: 1. Control Matters – If you control how and when work is done, that’s likely an employee. 2. The IRS Uses a 3-Factor Test – Behavioral, financial, and relationship-based tests determine classification. 3. A Contract Alone Isn’t Enough – Just calling someone a contractor doesn’t make them one. 4. State Laws May Be Stricter – Some states use the ABC test and presume employee status. 5. Have a CPA Review Your Worker Classifications – Don’t wait for the IRS to do it for you. Think about... ✔️ Knowing every person on your team is correctly classified ✔️ No fear of IRS letters or state audits ✔️ Building your business on a solid, compliant foundation That’s what working with the right tax strategy team brings: clarity, protection, and peace of mind. 📲 Unsure if your 1099s should really be W-2s? Let’s make sure your team structure protects you—not puts your business at risk. Get proactive. Avoid the IRS surprise. ➖➖➖ Over the last two decades, through strategic tax planning, I have helped multi-entity business owners increase business profits, pay less in taxes and keep more money. Through the "Smarta Method," I have successfully saved business owners on average more than $20,000 in income taxes annually. With over 1,600 tax strategies available, the "Smarta Method" identifies the ones that: 💰 Increase Business Profits 💰 Increase Business Cash Flow 💰 Increase personal wealth 💰 Reduce Taxes ***** 👉 Type “MARTA” in the COMMENTS, and I will send you a FREE PDF copy of my "5 Proven Steps to Stay in Charge of Your Hard-Earned Dollars and Keep Your Taxable Income in Your Pocket!" #taxtips #finances #yourvaluedcpa #entrepreneurs #startup #taxseason #businessowners