Free tool
What does getting classification wrong actually cost?
A rough estimate of your exposure if a 1099 contractor gets reclassified — back taxes, payroll tax, workers comp, unemployment, civil penalties, and legal defense.
Misclassification penalty exposure is the aggregate financial risk if a worker classified as a 1099 contractor is reclassified as a W-2 employee by the IRS, Department of Labor, or a state agency. Exposure typically runs 30-60% of wages paid over the misclassified period, depending on state, intent (willful vs inadvertent), and whether the agency pursues fully. This calculator gives you a directional estimate based on published penalty schedules and historical case data — it is not legal advice, and actual exposure varies significantly with case specifics.
Your rough exposure
Frequently asked questions
- No. This is a directional estimate based on published rates and historical patterns. For actual exposure in a specific case, consult employment counsel. For managed compliance that prevents the problem, talk to HQ Simple.
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