Diana Uhimov, April 17, 2014. Employee misclassification occurs when employers treat workers who should be considered employees as independent contractors or simply do not report them and pay them “off the books”. The consequences for misclassification may include civil penalties, liability for employment taxes, class action lawsuits for unpaid wages, and even criminal prosecution. Although engaging an independent contractor may appear to streamline the hiring process for companies upfront, it is critical to ensure that workers are properly classified to prevent audits, investigations and potential lawsuits. The crackdown…