The Daily Rundown: Employee Misclassification Audits On the Rise?

June 4, 2019

Category: The Daily Rundown


Welcome to the Small Business Run Down. Each day, we bring you stories and trends that impact small business owners and their workforce.

Today, worker classification audits are increasing, Washington state uses payroll taxes to keep seniors in their homes, and Kansas City joins the ban on salary history club.

Worker Classification Audits on the Rise

No matter the size of your business, properly classifying your employees correctly is a must. Misclassifying employees can be costly, and the likelihood of paying the price is rising.

The National Law Review argued that IRS audits of employee misclassification are increasing. Small businesses need to take special care to get it right.

The Number: $500,000. The fine for intentionally misclassifying an employee is up to $500,000.

The Quote: We strongly suggest that each business that engages independent contractors spend some time reviewing its policies and procedures for engaging these independent contractors to ensure that its classification of these workers as independent contractors can be defended if it becomes necessary.

To Keep Seniors at Home, Washington Turns to Payroll Tax

As the population ages, there’s a struggle to help seniors age in place in their homes. Washington state is applying a benefit to help do just that. And they’re using a payroll tax to fund the program.

The Number: 0.58%. The $36,500 benefit will be funded through a 0.58% payroll tax in Washington state.

The Quote:What’s most exciting for us and for the country is to have a working model we can learn from.”

Kansas City Joins Cities with Salary History Bans

Kansas City, Missouri is now one several cities to adopt a ban on employers inquiring about a potential employee’s salary history. The goal is to close the pay gap between gender and ethnicities.

The Number: 6. The Kansas City ordinance applies to businesses with six or more employees.

The Quote:The impact is to reduce disparities at the front end.

Salary History is Going the Way of the Dodo

Kansas City is just the latest to ban salary history inquiries. Here’s the skinny on the overall salary history ban trend so you can get in front it.


Jesse Noyes is Head of Content for Zenefits. He started out as a business reporter before beginning a career in marketing. Jesse is naturally curious not only about the work people do, but why they do it. His first job was building freestanding stone walls in his home state of Maine.

Category: The Daily Rundown

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