Do the risks of using non-employee workers outweigh the benefits?

With changes in the economy and with the future of health care many businesses are leaning towards using non-employee workers. This means instead of being on the books as an employee the person is given 1099 status as an independent contractor. In a recent article, employment law attorney Todd Lebowitz states that fewer employees have always meant lower healthcare costs, but after health reform, having fewer employees also means less exposure to penalties that will be imposed when employees opt out of company-sponsored health coverage.

While it sounds beneficial, there are potential risks. Companies that misclassify workers as nonemployees face a range of potential penalties and liability--under tax law, employee benefits law and employment law. In response to the high number of businesses classifying employees as independent contractors the IRS is planning to conduct 6,000 worker misclassification audits over the next three years. Not only will there be audits, but the government is considering creating legislation that would impose additional penalties to companies that misclassify their employees.
According to Lebowitz, Companies who misclassify workers as nonemployees may face liability under a range of legal theories, including:

•  Failure to withhold employment taxes, plus penalties and interest.
•  Failure to pay FICA and FUTA, plus penalties and interest.
•  Failure to pay overtime or minimum wage.
•  Failure to provide employee benefits.
•  Failure to obtain proof of eligibility to work in the United States.
•  Increased exposure under anti-discrimination and anti-harassment laws.

Knowing all of this, would you consider keeping employees as independent contractors or is it not worth the hassle? How do you save money on health insurance for your employees? Comment below.