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  1. #1
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,307

    Default Re: Unsure Of How To Pay My Employees Legally

    In your position, I would go with an independent contractor setup, particularly since 1) you don't have a separate business office and 2) there is a seasonality involved in your line of work that may frustrate a W-2 employee. ICs understand slow periods and make other arrangements in the slow time.

    I understand the desire to keep tabs on hours. This is a risk you take when you take on associates who aren't working in the same building as you are, whether they are employees or ICs.

    Have you thought about an electronic time sheet application? This one lets you clock in from any computer or cell phone. (There are a bunch of others out there, but they're meant for larger operations.) That or something similar may help you with the time tracking worries.

  2. #2

    Default Re: Unsure Of How To Pay My Employees Legally

    Hi Missy!

    Thank you for responding back to me! (BTW, your signature is fabulous LOL)

    I was on another legal board and I was told that I would not be able to do an IC very easily (basically), because in the end the burden of proof is on me to prove that they aren't employees.

    I was shown a provision in the code said that just because an worker works from home doesn't automatically make them an IC, and and told that in order to be an IC, they must do the same work for someone else.

    My situation definitely complicates how I can handle the MW-OT laws.

  3. #3
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,307

    Default Re: Unsure Of How To Pay My Employees Legally

    Quote Quoting Octagon Girl
    View Post
    Thank you for responding back to me! (BTW, your signature is fabulous LOL)
    *grin* Thankee kindly! It's all true, and it amuses me when people get all indignant because...well, I bite!

    No one pays any mind to warning labels anymore. *sigh*

    Quote Quoting Octagon Girl
    View Post
    I was shown a provision in the code said that just because an worker works from home doesn't automatically make them an IC, and and told that in order to be an IC, they must do the same work for someone else.
    If I must be doing the same sort of work for someone else in order to be an IC, then every company or person I've ever IC'd for is in some DEEP DOODY. Including Google, for whom I IC'd for nearly 5 years.

    That would also include the two clients I am a standing IC for and the 3 or 4 who call upon me in emergencies. I do different work for all of them!

    Nope. That person was misinformed. This article does a nice job of discussing what an IC is.

    I think that JK has given you fantastic advice, and it would be in your best interests to take it. The easiest way to keep out of trouble with the IRS is to ask them to tell you what you are.

  4. #4

    Default Re: Unsure Of How To Pay My Employees Legally

    Hi everyone!

    Thanks again for everything!

    I forgot to mention that previously I called the IRS on three different occasions and received different answers. One referred me to their checklist, which left me with the conclusion that they would be employees, the other told me it was my choice (gee, thanks. )

    So I've pretty much have thrown my hands up and will be going with employee for the lack of potential hassle. The problem now is trying to find an efficient way to keep track of hours worked since a majority of them will be working from a different location and different work hours.

    Thanks again everyone...another thing I am looking into is letting a temp agency handle my payroll. That would also help out with insurances, WC and payrolling.

  5. #5
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Unsure Of How To Pay My Employees Legally

    verbal anything, especially over the phone, is worthless and not dependable.

    Fill out the ss-8 if you can do so pro-actively or if you already have employees, it would be no problem filling it out. This way you get a determination IN WRITING as to the IRS position.

    keeping time. It depends. There will have to be a lot of trust. That is the nature of the beast.

    You can get GPS recorders for a couple hundred bucks a piece that can be read on your computer. It will time stamp and locate on a map. Each person can be issued a recorder and then either they can download it onto the computer and send it to you or you could collect them and do it yourself.

    Before anybody says you can't do that for whatever reason, realize that UPS does that to every driver they have as well as many many delivery and trucking services. There are a lot of business that use GPS locators everyday.

  6. #6
    Join Date
    Mar 2008
    Posts
    1,995

    Default Re: Unsure Of How To Pay My Employees Legally

    I wouldn't go the "employee" route, as I've had businesses utilizing both employees and IC's, and I worked as an IC. There are inherent risks having employees.

    The first and foremost is "liability" for someone operating "sight unseen". I don't know if he or she be driving around seeing customers. checking on wedding sites, but as an employee, and when they are even driving their own car on while employeed, during business hours clocked in, as an employee, if they run someone over injuring someone seriously, on he job, you are on the hook. That's why one of the first questions the insurance company would ask in an accident case is "what were you doing at the time of the accident". If he or she said they were on assiginment, during working hours, then, you're on the hook.

    I had an employee, would drive out in a customer's car during business hours, to test drive a car, then visit a liquor store, buy a bottle, have a few sips, then drive back, and stagger out of his car. I did not see this, but a local neighbor pointed this out to me, we kept an eye on him, and soon enough, the following time it happened, he was told he'll be fired the next time, and he was finally fired. I cannot have an employee drinking and driving during business hours. How can YOU be sure your employee who clocked in, is NOT having a beer or two for lunch, and then drive out while clocked in, even to "get a burger"???

    With employees, in my state, I also get stuck paying "unemployement insurance", though I never had seasonal employees. With IC's, that is not my concern. With an employee, business slows down, I lay him off, he collect UI, my rates go up.

    With unpredictble revenues, getting bogged down like this is not a good idea.

    I'm glad you won't have employees working in your home, because if something happens, your homeowners liability carrier won't be too happy with someone operating a business out of a home, and would deny claims if anything happens. I partnered with someone doing business out of his home office, where I worked several hours a day, and he made sure I'm an IC, not an employee. If I was employed and worked there, got injured, his insurance company would have a big problem.

    Employers are held responsible because the employee is under your control. In your case, making the assistants an employee, they are not under your control, yet you're still held accountable.

  7. #7

    Default Re: Unsure Of How To Pay My Employees Legally

    OMG, you spoke nothing but the truth! I am so sorry about your previous situation-- I know it just had to be infuriating and frustrating at the same time.

    The Act defines the employer-employee relationshisp (basically, I think) as someone who is dependent upon the business which s/he serves. Since my staff would have other full time jobs, and again, this would not be full time work (at the most, they could rack up 60 hours per year for one contract), I am wondering if I am relieved of that relationship and able to go IC.

    But considering that their services would be integral (as they are handling clients), so to speak, I think that brings me back to employee (by virtue of the law)

  8. #8
    Join Date
    Mar 2008
    Posts
    1,995

    Default Re: Unsure Of How To Pay My Employees Legally

    One other thing if you plan to have employees is to be familiar with the "workman's comp" laws in your state. I have a business where I had employees as well as utlilizing the services of many many IC's supplementing the work of employees.

    In my state, NY, where the owner of a business is the only worker, YOU ARE EXEMPT from workman's comp. But so long as you have ONE employee, you have to go out and get a WC policy. If your assistant got into an accident as an employee, driving to see a wedding say, not only would YOU be responsible for paying hospital bills (covered under WC) for his or her injuries, but everyone else he or she hits.

    It gets better.

    When I started using IC's, I didn't know the intricacies of WC, and under my workman's comp policy, when they audit me, I'm reponsible for, and get CHARGED for IC's that does not have WC, or is NOT exempt from it. Here in NY State, I can hire an IC, but in order for him to be exempt from WC (so I wont get charged) , he has to set himself up as a business, could even be a proprietorshhip, but doing so would get him a WC exemption if he is the only employee, and that gets you off the hook. The first year I had my WC audit, I had to call around my IC's and get their WC policy numbers. I was surprised (I shouldn't be, but I was stupid) many didn't have WC policies, and I was CHARGED for those that didn't carry WC. In other words, I'm paying for THEIR WC.

    If you are not aware of any of this, you'll get yourself in trouble coming and going.

    Now, if it is the SECOND job for these people, it is EVEN more important you set things up right. I don't think their PRIMARY employer would appreciate their employees getting hurt on their SECOND job, collecting disability benefits, medical, and so forth on the first employer, and you get off scott free. No way.

  9. #9
    Join Date
    Jan 2006
    Posts
    38,867

    Default Re: Unsure Of How To Pay My Employees Legally

    before making the decision as to IC or employee, you first must determine if in fact they would be classified as employees per the rles determined by the IRS

    If they are defined as employees by the IRS, you have no choice but to consider them as employees and treat them as such.

    he federal DOL also has some input as the FLSA plays heavily on employee situations and failure to treat an employee as an employee can get you in a heap o' trouble.

    the fact the have other jobs does not make any difference as to IC/employee status. Anybody can have multiple jobs, employee or not.

    here is a link or two that may help you define your position. I would tend to think you have an employee situation as you do seem to have too much control over them but this is often a question not easily answered.

    http://www.irs.gov/businesses/small/...=99921,00.html

    http://www.gcfa.org/PDFs/TaxPacket20...Contractor.pdf

    I do not know ifyou can file a SS-8 with the IRS as a proactive measure but if you can, I would suggest doing so. That form simply is asking them to make the determination. Since they will ultimately make the determination should there be ever be any question anyway, it would seem prudent to ask them for their determination before you have already hopped in the pot and cooked your own goose.

    Have you ever thought of hiring through temp agencies such as Manpower, Kelly Services, or any others that may be available in your area.

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