On September 21, 2011 the IRS started a new program that allows employers to correctly classify those people who were classified as independent contractors (incorrectly) to employees with minimal financial impact.
There are restrictions and you still owe money for clearing up your records but this is something you should look into if you have any doubt that anyone working for your organization may be misclassified. If found to be misclassifed California's SB 459 has just increased the penalities to where they now range from $5000 to $25,000 per violation.
