What happens if I misclassify a contractor as an employee?

Misclassification can result in back taxes, penalties, and legal liability in both the hiring company's jurisdiction and the contractor's home country. In Singapore, misclassifying a worker to avoid CPF contributions can result in fines of up to S$10,000 and potential imprisonment for repeat offences. In the US, the IRS and Department of Labor impose significant penalties for misclassification. Document your classification decision at the start of every contractor engagement.