Small companies are relying increasingly on independent contractors, even as the Internal Revenue Service cracks down on employers who have incorrectly classified their workers. "As economic situations get tougher, that's when everyone is looking to cut costs," according to Lisa Petkun, a partner at the law firm Pepper Hamilton. "It's significantly cheaper to have an independent contractor." The standards for determining whether a worker is an employee or an independent contractor can be confusing, which may contribute to improper classification.
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