IRS Gets Class Conscious: Switching to Independent Contractors Draws Scrutiny, ABA Journal (April 2011):

Shifting from full-time employees to independent contractors is a recessionary cost-cutting measure some businesses implemented. But for those who have misclassified their workforce, the glare of the IRS spotlight may soon be upon them. Over the next three years, the IRS is auditing 6,000 randomly selected businesses to determine whether they have workers who’ve been classified as contractors when they should be treated as employees. When appropriately done, classifying a worker as a contractor allows a business to escape unemployment, Social Security and Medicare taxes and overtime pay. Additional taxes, penalties and interest result from worker misclassification.