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White Paper

The Complete Guide to Employee Classification

The Complete Guide to Employee Classification

The Complete Guide to Employee Classification

Stoke
Pages 19 Pages

The Stōke white paper explains how worker misclassification exposes companies to heavy penalties, lawsuits, and reputational risk. With 59M freelancers in 2020—expected to exceed 90M by 2025—governments are tightening oversight. Employees get W-2s with legal protections, while independent contractors get 1099s without benefits. Misclassification deprives governments of tax revenue, denies workers protections, and gives firms unfair cost advantages. Key tests include the IRS “Right to Control,” the ABC test, and the DOL’s “Economic Reality” test. Penalties range from fines to back pay and even criminal charges. Compliance requires audits, proper documentation, and continuous monitoring.

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