Construction companies rely on subcontractors because they provide workers with specialized skills, such as electrical wiring, plumbing, drywalling, excavating, and so on, to employers who could not afford to keep these workers on a regular payroll. There are other advantages, too. When you hire an independent contractor, you don't have to pay payroll taxes, such as FICA, or include that sub in your company's pension plan or health plan. Nor do you have to file federal withholding or prepare income taxes for the subcontractor. In fact, these advantages are so attractive that some employers succumb to the temptation to class workers who are really employees as independent contractors. When the IRS catches someone doing that, there are big-time penalties. But
