We hope you’re aware that many parts of government, especially the U.S. Department of Labor (DOL), are cracking down on employers that deliberately deem their workers independent contractors rather than employees. Concerns are focused particularly on the lack of benefits for contractors (remember the Microsoft “contractors” who didn’t earn stock options?) but also on the lack of job security, promotions and pay raises, and the protection of such laws as civil rights Title VII, the Americans with Disabilities Act, the Family and Medical Leave Act, and wage and hour laws. But one government agency—the Internal Revenue Service (IRS)—has recently proffered a helping hand.

IRS has announced a low-cost settlement program for employers that acknowledge that some of their contractors have been misclassified. You might call it a forgiveness program. Under the Voluntary Classification Settlement Program, employers that decide to begin treating workers as employees can make a small payment for past payroll taxes instead of triggering a full IRS audit. They will avoid back taxes, penalties, and interest for 3 years of misclassification and pay only about 10 percent of the taxes for the most recent year.

Although IRS is focusing the program on small employers, any employer is eligible if: It has consistently classified the workers as nonemployees in the past; it has filed all required Forms 1099 for them in the previous 3 years; and it is not currently being audited by IRS, DOL, or a state agency concerning the status of the workers. Interested employers can apply by filing Form 8592 at least 60 days before they plan to switch their contractors to employee status.

Another perk: Participants will get a special 6-year statute of limitations instead of the usual 3-year limit on payroll taxes. And, IRS acknowledged that the various tests for whether workers should be classified as employees or contractors are both complex and outdated. Not sure whether your contractors really should be employees? All the tests and how to apply them to your workers’ duties are discussed under Independent Contractors.

Tip: For starters, the IRS has a three-part test that considers (1) the amount of behavioral control you exercise over the individuals, (2) the amount of financial control you have, and (3) the general relationship between the organization and its contractors. In terms of behavioral control, for example, consider how the worker performs tasks and how detailed the instructions are that the person is given.