Skip to content


Enjoy peace of mind with your contingent workforce. 

Learn more >>

  • Contractor Payroll & Management
  • Worker Insurances
  • Advanced technology
  • In-depth reporting
  • Contractor Care


Our ‘OneVendor’ solution is your back office partner.

Learn more >>

  • Contractor Payroll & Management
  • Worker Insurances
  • Cashflow funding
  • Contractor Care



Welcome to a global network of contractors with the world at their feet.

Learn more >>

  • Contractor Payroll & Administration
  • PI/PL Insurance
  • Salary Packaging
  • Contractor Care


Latest News & Blogs

Enterprise: The Role of a Contingent Workforce Strategist

Learn more >>

Contractors: How to set & negotiate rates as an independent contractor

Learn more >>

Case Studies


Allianz - Changing the Game

How Allianz implemented an industry-leading Contingent Workforce Management solution, at a fraction of the cost of traditional offerings.
Now a finalist for Vendor Solution of the Year at the 2023 ITAs!

Why Oncore?


Oncore's unique capabilities and how it benefits our customers.

Over our 20 + year history, we've come to realise what our customers are really looking for when they need a partner to help them with their contingent workforce needs.

Our Partnerships
Our Story

oncore-post-Building-an-Effective-Future-Gig-Worker-Strategy-img-768x384At Oncore, our goal is to inspire and enable the global workforce to enjoy the freedom of contracting and flexible work.

Learn more >>

Our Culture

viktor-forgacs-7C5N8yLaeDI-unsplash-1We believe the future of work means having more control over your career, collaborating freely without politics & fostering flexibility in how we think and approach our roles.

Learn more >>


Oncore-post-201910-post-3-img-1-350x175-3At Oncore, our goal is to inspire and enable the global workforce to enjoy the freedom of contracting and flexible work.


Coming Soon

Our Technology


Configurable, powerful software for your business.

Ensure your contractors are taken care of with Oncore technology and focus on growing your business.

Contact us

Get in touch with one of our team members

1300 654 484

Nick BancroftApril 24, 20243 min read

Employee misclassification: The consequences and penalties

In the aftermath of COVID-19, businesses are recognising the advantages of employing freelance workers to bolster their operational activities. The advantages are clear-cut, hiring contractors enables geographical flexibility, minimises payroll expenses, and introduces adaptability into your processes.


However, this strategy comes with a significant drawback: the misclassification of workers. According to certain estimates, up to 30% of American employers have incorrectly categorised at least one employee as an independent contractor.


Hiring contractors carries an inherent risk of misclassification. Additionally, in the US, nearly 10% of workers are misclassified and 10-20% of businesses have misclassified an employee.


Misclassifying your workforce can lead to severe consequences, including fines, penalties, legal complications, and harm to your corporate reputation. Keep reading for a comprehensive overview of the repercussions associated with misclassifying employees.


What constitutes employee misclassification?

Employee classification entails defining the legal status of your workforce according to government regulations. Each country establishes its guidelines regarding the classifications available to workers. However, in general, workers are typically categorised as either employees or independent contractors.


Why does this classification matter? It's straightforward: employees are entitled to a broader range of benefits compared to contractors. When you inaccurately classify an employee as an independent contractor, they are deprived of these benefits.


Depending on the jurisdiction, these benefits may include:

  • Minimum wage
  • Overtime pay
  • Paid time off (PTO)
  • Sick pay
  • Maternity/paternity leave
  • Health insurance coverage
  • Protection against unjust termination


Consequences of misclassifying employees

Misclassifying employees is a grave concern, and the repercussions can be profound. To underscore this point, we've compiled a selection of headlines from the United States alone over the last five years:

  • 2020: Ridesharing giant Uber agreed to a $20 million settlement to resolve a lawsuit filed by drivers in California and Massachusetts
  • 2023: Sports retail magnate Nike faced potential tax fines amounting to $530 million for misclassifying numerous temporary office staff
  • 2022: A Virginia-based construction staffing firm was mandated to reimburse $278,073 in owed wages to over 200 workers who were misclassified
  • 2019: IT consulting firm Infosys was fined $800,000 for misclassifying workers and committing tax fraud


Penalties for Misclassifying Employees

What are the main tax risks that may arise for contingent workers?

The main tax risk is the risk of misclassification. If the Australian Taxation Office (ATO) or State Revenue Office finds that an individual is an employee, this will lead to liability for:

  • Failure to withhold Pay-As-You-Go (PAYG) from worker payments
  • Failure to make superannuation contributions
  • State payroll tax for employees and individual contractors (unless an exemption is available) 


How to accurately classify workers in 2024

Companies often face more substantial fines and penalties when they intentionally misclassify their workers. However, fines for employee misclassification can still occur even if the misclassification was unintentional.


Here's how to avoid such situations in 2024:

  • Familiarise yourself with the regulations in your state: Worker classification laws vary from one country (and state) to another. It's essential to comprehend the laws applicable to your location to ensure compliance. Beware: regulations change frequently, and ignorance of recent updates won't excuse non-compliance if you're penalised.


  • Conduct regular worker classification audits: The dynamics of your arrangements with workers may evolve. What starts as a legitimate contractor-client relationship could eventually resemble an employment agreement. Regularly assessing the status of each worker on your roster helps ensure accurate classification.


  • Seek guidance from local legal professionals: Employment and tax laws can be complex, especially with frequent legislative changes. Collaborating with legal experts familiar with the regulations in your jurisdiction can help prevent employee misclassification errors.


  • Develop comprehensive contractor agreements: While worker classification is primarily determined by actual treatment rather than contractual terms, well-crafted independent contractor agreements serve as reminders of the intended working relationship for both parties.


  • Provide training to managers on misclassification: The degree of control exerted over a worker's tasks is a key factor in determining their classification. Managers should understand appropriate behaviour when overseeing workers to avoid unintentional misclassification. Thorough training can help prevent misclassification incidents.


  • Transition misclassified contractors to employees: If any misclassified employees are identified, they should be converted to employee status if you intend to continue engaging with them. Keep in mind that failing to take action could result in fines, penalties, and retroactive payments of wages, benefits, and taxes for the period of their employment. Simply terminating the relationship isn't a resolution.