Companies Largely Unaware of Financial Risk of Independent Contractor Misclassification, Reveals ICon Survey Report

- Financial Penalties Can Be More Than 45 Times Higher Than Companies Anticipate –

- More Than Four-in-Ten Organizations Have Failed Worker Misclassification Audits -

FOSTER CITY, Calif.--()--Companies utilizing an independent contractor workforce are facing a much larger financial risk of misclassification than they anticipate, according to a new survey report from ICon Professional Services, a leader in independent contractor compliance. Released today, the report reveals a clear and significant gap between the facts of misclassification risk and the perception of what executives believe to be true. With the contingent labor market on the rise – 84 percent of organizations surveyed will maintain or increase investment in independent contractors in 2015 – organizations recognize the benefits an independent contractor workforce brings to the business but are unclear on the growing risks.

“I was surprised by the extent to which senior executives have such a blind spot to their total risk exposure, and don’t realize the significant costs associated with misclassification,” said Patricia Griffin, ICon Professional Services CEO. “At the same time, we know it’s difficult for a CEO to completely understand the risk, since many misclassification cases are settled and remain out of the public domain. ICon is here to educate the c-suite on what goes on behind-the-scenes and help clients avoid long, drawn out, and many times crippling fines and penalties.”

The 2014 ICon Executive Insight Report: Worker Misclassification, Distinguishing Perception from Reality, reveals several key findings:

  • Nearly seven-in-ten (68 percent) respondents said they have great confidence they would pass an audit, but in reality, only 55 percent actually reported passing their audit.
  • Of the 45 percent that did not pass their audit, more than one-quarter (27 percent) of those were required to pay “outrageous” fines.
  • 77 percent of respondents believe their total financial risk exposure to failing a worker misclassification audit is below $100,000. The reality is that for 100 independent contractors paid on average $100K annually, a company’s financial risk could exceed $4,500,000.
  • There exists a clear uncertainty about the status of a company’s independent contractor workforce. Only 57 percent of respondents report they have “great confidence” in knowing the exact number of independent contractors they are currently using, increasing their overall risk exposure.

“Properly classifying your workforce is no longer a choice,” said Dana Shaw, COO at ICon Professional Services. “The majority of Fortune 2000 employers are either ignoring or seriously underestimating the reach of the government mandates and therefore financial risk to which they are exposing themselves. With the contingent labor market on the rise, business leaders can’t afford to ignore the importance of properly classifying their employees.”

Independent Contractor Landscape

When it comes to the overall contingent workforce landscape, the survey reveals that independent contractors play in an increasingly important role in the labor market:

  • Eighty-four percent of respondents said they would maintain or increase their investment in independent contractors in 2015.
  • Half (50 percent) of those surveyed utilize up to 20 independent contractors per year, while 30 percent engage up to 100 per year. Fifteen percent utilize more than 500 contractors per year.
  • The largest proportion of respondents (37 percent) retains their relationship with contractors for up to a year, while almost a third (28 percent) invests for up to three years.
  • Nearly seven-in-ten (69 percent) of respondents use independent contractors because of their unique specialist skills.

For additional information, including a chart to help companies calculate their financial risk of worker misclassification, please access the full report here.

Survey Methodology

An inaugural sampling of senior executives was surveyed in August 2014 to provide insight on their worker misclassification experience. Respondents represented a wide range of industry sectors, from Advertising, Energy and Financial Services to Government, Healthcare and Technology. Data was gathered from organizations that employ less than 100 people and only a handful of independent contractors a year, to those with more than 5,000 people and hundreds of independent contractors.

About ICon Professional Services

ICon is a leading provider of Contingent Workforce Management solutions, which include 1099 contractor compliance, payroll and benefits administration. Since 1997, ICon has applied experience, technology, and process execution to create solutions that deliver on the promise of an independent workforce by expertly navigating the complexity of government compliance. Our award-winning iConnect® technology platform remains at the forefront of the industry and provides powerful competitive advantages in terms of cost and performance. This technological advantage, along with our dedication to providing superior customer service, has earned ICon a long list of awards and satisfied customers. For additional information, visit


ClearEdge Marketing
Ann Warren

Release Summary

ICon Professional Services Survey: Companies Unaware of Financial Risk of Independent Contractor Misclassification; Penalties Are More Than 45 Times Higher Than Companies Think, and 4-in-10 Fail Audit


ClearEdge Marketing
Ann Warren