A misclassification occurs when an employer classifies a worker as an independent contractor when they should be classified as an employee. Both intentional and unintentional misclassifications carry penalties for employers from the IRS and Department of Labor. When the misclassification is intentional, the employer may be liable for 100 percent of the worker’s taxes. Employers may be liable for almost 40 percent of the workers taxes when their misclassification is unintentional.