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Independent Contractor my A$$

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  • #21
    In Maryland, all employers are mandated to carry workers comp insurance. IF the employer has workers comp insurance, ALL employees are covered and an employer that gets hurt on the job can only file a workers compensation claim and is not allowed to pursue a civil case against the employer. In this example, if the employer had workers comp, the girl would have been covered and she could not have directly gone after the employer.

    The decision was correct, and juries do crazy things, and by trying to save a few bucks it cost the employer a lot of money.
    Man plans. God laughs.

    Comment


    • #22
      Technically as an independent contractor you are self employed and where I'm located an independent contractor can take out workers comp insurance personally as the person who hired you technically is not your boss or employer.

      As I said a tricky situation where I think we can all agree that very carefully worded contracts are a must. I don't view it as the barn owners being cheap and think they got unlucky.

      Comment


      • #23
        Originally posted by trubandloki View Post
        I assume you carried your own liability type insurance then?
        As an independent contractor it is your job to have your own insurance.


        I cleaned stalls (in exchange for money off board) for several years. I considered myself an independent contractor. I used my own wheel barrow and pitch fork and there was no set time for the stall cleaning.
        If I was working with horse's I'd definitely carry my own liability and worker's comp.

        When I worked with a pet sitting agency I had the option of having either and chose not to as the business had a liability policy that covered of something happened to the pet while I was caring for it etc.

        Definitely dependent on the situation and of course based on what the laws are.

        Comment


        • #24
          Originally posted by Kwalker024 View Post
          I actually don't agree with the ruling. I have many friends in various industries that are independent contractors and quite happy with the situation. Some are on hourly pay, salary, some commission. I used to work for a pet sitting agency where I was paid a percentage of each job and they did NOT provide workmen's compensation to us and explained that up front. We had the option to purchase it ourselves and it was quite affordable $20-30 monthly I believe. I love being a 1099 and honestly after deductions I was allowed to take paid less in taxes on a yearly basis then I had compared to W-2 jobs I have worked in the past. Yes the employer saves money too but to me it was a win win for both of us.
          It's one thing to knowingly choose to be an independent contractor. It can be a great gig - I did it for 15 years. But it takes some knowledge and professional support (tax person, insurance person) to set it up right so you don't get screwed or screw yourself.

          It's quite another thing to be 17, start working for someone on an hourly wage, and find out *after* the accident that they weren't treating you as an employee - meaning that you weren't covered by any insurance at all. Chances are the barn wasn't giving her a 1099 either, so you wouldn't have a clue that you weren't an employee. Or, just be like my dimwit nephew and think that you'd gotten a raise since they hired you as a 1099 and you got paid $4 more an hour, but you never checked into it to discover that you were now responsible for a whole lotta stuff and that your effective wage was less per hour than you were making before.

          The software business is rampant with companies mis-using people as contractors when they are really employees. I think Microsoft got hit with a huge suit over this very topic, for example.

          Don't know if this case was ignorance or deliberate, but I think the decision was correct.

          Comment


          • #25
            Originally posted by oldernewbie View Post
            It's one thing to knowingly choose to be an independent contractor. It can be a great gig - I did it for 15 years. But it takes some knowledge and professional support (tax person, insurance person) to set it up right so you don't get screwed or screw yourself.

            It's quite another thing to be 17, start working for someone on an hourly wage, and find out *after* the accident that they weren't treating you as an employee - meaning that you weren't covered by any insurance at all. Chances are the barn wasn't giving her a 1099 either, so you wouldn't have a clue that you weren't an employee. Or, just be like my dimwit nephew and think that you'd gotten a raise since they hired you as a 1099 and you got paid $4 more an hour, but you never checked into it to discover that you were now responsible for a whole lotta stuff and that your effective wage was less per hour than you were making before.

            The software business is rampant with companies mis-using people as contractors when they are really employees. I think Microsoft got hit with a huge suit over this very topic, for example.

            Don't know if this case was ignorance or deliberate, but I think the decision was correct.

            I totally agree transparency is 100% necessary and the article did make it sound like the barn owners had her set up as a 1099 not paying her under the table. And I can see where a 17 year old might not understand what legally 1099 might mean and might just say ok awesome I "don't" get taxes taken out and get paid more money which obviously is a misconception. Hence that's why I wonder where her parents were.

            Just seems like she had probably a pretty decent set up going (getting to train, going to seminars for further education, etc.) and she got hurt blamed the owners for repeatedly putting her in a dangerous situation (the pasture where she was kicked before the incident occured) and won.

            Like I said the thing that can be taken away from it as barn owners is to have very specific contracts with your workers to cover yourself.

            Comment


            • #26
              Just now putting together my own business (non-horse related) and going through various seminars and discussions, this is the absolute wave of the future, er, rather it is here now...

              The IRS and state tax depts will bend over backwards to name someone an employee vs. an independent contractor and are looking at employers who are not complying - even if both parties wish/prefer up front that that is what their relationship will be. If the principal in any way directs how they want a job to be done is a deciding criteria. Even if not overseeing a job directly/there in person.

              About the only way you can have an independent contractor now, is if the agent/worker has themselves as an independent corporation.

              In the business I am beginning, independent claims adjusting, it was/is very common for individuals to wish to work an occasional day here or there. And do so only when needed. As an independent contractor. No more.

              If I get overwhelmed and wish to ask someone else to give a hand, even if just briefly - and they wished to be paid a gross amount I can't do it. Will have to consider them an employee, pay the extra taxes, SSI, insurances, etc.

              ExSO, an attorney I worked for, hired a gal to just do his marketing - she printed up his flyers, did mailings, etc. out of her home, and in doing so could stay home with her young children. He had hired her as an independent contractor. He laid her off last year when work got slow, and now agrees if he were to take her back on, it would have to be as an employee.
              But he thought, "This procession has got to go on." So he walked more proudly than ever, as his noblemen held high the train that wasn't there at all. H.C.Anderson

              Comment


              • #27
                Sadly, workers comp is not that expensive or difficult to get, just as withholding taxes and paying the employer's portion is not that hard to do. As for hiring minors -- that is going to be dicey regardless of whether they are employees or contractors as minors are a protected class.

                Based on my past experience with liability claims, a great deal can be done to mitigate a claim by simply doing the right thing. First of all, showing concern and empathy toward the injured party helps. People really don't want to sue someone who they like and believe has treated them in a reasonable manner. Also, covering the medical costs may have resolved the matter without litigation.

                Since we don't know the facts of the situation, it is hard to tell what was done to limit damages. A $250,000 non-economic damage award is substantial; my guess is that the plaintiff was a compelling witness and the defendant was less compelling.
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                • #28
                  Originally posted by Kwalker024 View Post
                  Technically as an independent contractor you are self employed and where I'm located an independent contractor can take out workers comp insurance personally as the person who hired you technically is not your boss or employer.

                  As I said a tricky situation where I think we can all agree that very carefully worded contracts are a must. I don't view it as the barn owners being cheap and think they got unlucky.

                  what is "workers comp for contractors"? wouldn't that just be health insurance? AFAIK, when you start asking the WC folks (which i have to do) if ICs need WC ins they have to say "no" because it isn't offered.

                  ICs can get disability ins but it is VERY expensive and doesn't really pay much.

                  in the end an IC status is really about whether a person files a 1040 C or not.....

                  for folks that are unsure, just go to the IRS site and do some reading... it isnt absolutely clear, but it is clear enough to know pretty much 99% of the time.

                  Comment


                  • #29
                    Originally posted by mbm View Post
                    what is "workers comp for contractors"? wouldn't that just be health insurance? AFAIK, when you start asking the WC folks (which i have to do) if ICs need WC ins they have to say "no" because it isn't offered.

                    ICs can get disability ins but it is VERY expensive and doesn't really pay much.

                    in the end an IC status is really about whether a person files a 1040 C or not.....

                    for folks that are unsure, just go to the IRS site and do some reading... it isnt absolutely clear, but it is clear enough to know pretty much 99% of the time.

                    Independent contractors can get their own personal work's comp id the person who hired them doesn't offer it to them. It is roughly 20-30 a month where I live. The difference between health insurance and work's comp is the worker's comp will potentially over lost wages if the person is out of work.

                    Comment


                    • #30
                      Originally posted by CVPeg View Post
                      Just now putting together my own business (non-horse related) and going through various seminars and discussions, this is the absolute wave of the future, er, rather it is here now...

                      The IRS and state tax depts will bend over backwards to name someone an employee vs. an independent contractor and are looking at employers who are not complying - even if both parties wish/prefer up front that that is what their relationship will be. If the principal in any way directs how they want a job to be done is a deciding criteria. Even if not overseeing a job directly/there in person.

                      About the only way you can have an independent contractor now, is if the agent/worker has themselves as an independent corporation.

                      In the business I am beginning, independent claims adjusting, it was/is very common for individuals to wish to work an occasional day here or there. And do so only when needed. As an independent contractor. No more.

                      If I get overwhelmed and wish to ask someone else to give a hand, even if just briefly - and they wished to be paid a gross amount I can't do it. Will have to consider them an employee, pay the extra taxes, SSI, insurances, etc.

                      ExSO, an attorney I worked for, hired a gal to just do his marketing - she printed up his flyers, did mailings, etc. out of her home, and in doing so could stay home with her young children. He had hired her as an independent contractor. He laid her off last year when work got slow, and now agrees if he were to take her back on, it would have to be as an employee.

                      ?

                      I think that the IRS and states are cracking down on incorrect categorization of folks - they are not against 1099 contractors per se.

                      If someone is truly offering services to the public then they are an IC. It is pretty darn clear. It is not about the time you work for someone.

                      We can use me as an example: I offer accounting & bookkeeping services to small businesses - you can find my info on Google, yelp, etc. I have my own URL, etc. It is very easy to classify me as an IC because of these facts.

                      Now, if I were only providing services to one company, if I went to work 9-5 and had to do as they say, when they say to do it - while I am providing the same services I would be classified as an EMPLOYEE.

                      Most folks who say it is unclear are trying to bend the line... in most cases it is very very clear.

                      So, yes, if you get overwhelmed and you need an office worker - unless you hire someone who offers those services to the public (and those folks are out there) you will need to hire the person as an employee.

                      As for cost - a REAL IC will charge far more than an employee - why? Because they need to cover the "employer taxes" that they have to pay... they also have to pay for their overhead. So a 1099 IC will charge usually about twice as much as an employee would.

                      My suggestion would be to ask before you make an error that could have large ramifications.

                      Comment


                      • #31
                        I agree with the decision wholeheartedly having been in that position myself in a training situation. I was hired as a riding instructor. I had to work when I was told, use the horses, tack, arena and jumps that were provided. I was clearly an employee. But frankly the BO was not interested in anything but getting her business going at the lowest cost possible. Fortunately I was NOT a teenager, I was experienced, and knew a dangerous situation when I saw one and would not put myself in harms way.

                        The teenager was in no way responsible for what happened to her. At 17 the Farm should've been looking out for her considering how much work they were getting out of her. Field feeding is ALWAYS dangerous, and in a crowd of 30? Having her be the only person on the farm was just plain negligent.
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                        • #32
                          Originally posted by Kwalker024 View Post
                          Independent contractors can get their own personal work's comp id the person who hired them doesn't offer it to them. It is roughly 20-30 a month where I live. The difference between health insurance and work's comp is the worker's comp will potentially over lost wages if the person is out of work.
                          Interesting. It is not offered in California. Can you post a link?

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                          • #33
                            The IRS has a list of 20 questions that help you determine if you are an independent contractor or not.

                            http://www.richterscale.org/garage/20ques.htm

                            It was, for example, really important to me to get a second client when I first started out as an independent so I wouldn't have to justify my independence. I also had to endure some really weird administrative arrangements to protect my clients from these sorts of issues as well.

                            Comment


                            • #34
                              Sounds right to me. Independent contractors furnish their own tools and use their own methods, and are generally paid when the work is finished - like your house painter. Employees are paid by the hour, use the employer's tools, and are told what methods to use to do the work.

                              I guess the BO didn't want to buy workers comp insurance. But had they done so, the girl wouldn't have been able to sue them in civil court and get a jury award. She'd have been limited to the recovery allowed by the workers comp statute and if unsatisfied with the carrier's settlement would have only been able to go before the Workers Comp commission.

                              Penny wise and pound foolish on the employer's part.
                              I'm not ignoring the rules. I'm interpreting the rules. Tamal, The Great British Baking Show

                              Comment


                              • #35
                                actually, the 20 points is "old school" and there are new criteria... please just go the to IRS web site and read

                                http://www.irs.gov/Businesses/Small-...or-Employee%3F

                                Common Law Rules

                                Facts that provide evidence of the degree of control and independence fall into three categories:
                                1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
                                2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
                                3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

                                Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

                                Comment


                                • #36
                                  Ex-lawyer and ex-employer chiming in (bear in mind "my advice is as good as my fee"). Many excellent and correct comments already.

                                  Doesn't matter what she and the barn agreed to, what she and the barn intended, or what she and the barn understood. Two parties can't agree to violate the law. The same legal standards to determine employee versus contractor apply in an injury lawsuit, which was discussed here; they apply under the state Workers' Compensation Board, which assuredly is preparing some MAJOR fines again the barn; and they apply in IRS proceedings (the IRS, also assuredly, is now going to go after the barn for not contributing FICA for her, and not contributing to unemployment funds -- the state probably will go after that too); and the IRS will also probably expect the girl to contribute that portion of SS/MC withholding that was NOT withheld from her paychecks.

                                  An independent contractor is like your farrier. Or yes, there are roving groups of stall cleaners who go barn to barn on their own hours, with their own equipment, who are probably crossing their fingers but at least are making the effort to legally be considered independent contractors.

                                  Ironwood Farm, I wish I'd lived where you are, because when at one point I had 5 employees and a fairly busy lesson barn in an affluent Boston suburb, my Workers' Comp premium was unbelievable, plus contributing all the withholding stuff, plus the state and federal unemployment insurance....it really upset me because I knew so many barns that just paid people under the table and got away with it, but I just didn't feel comfortable doing that.

                                  Now I'm in Virginia, no boarders, my horses all live out 24/7 with automatic waterers...I have it set up so I can do all the chores myself and I won't ever have employees again, it's just waaaaay too expensive for my little lesson program (my employees were great, that's not it).

                                  And as far as knowing the risk, or accepting the possibility of injury, or anyone who has stated that "I wouldn't sue in that position," you know what? Until you, or your child, has been seriously injured, you don't know what you'll do -- and if it's a really serious injury, you might not be the one making the decision whether to sue or not.

                                  Not to get too political, but now with "mandatory health coverage," I don't understand why we still need worker's comp. If you are injured due to ordinary risks or simple negligence, you've got health insurance (right? right?). If your employer's negligence was gross or reckless, then you should be able to sue them.
                                  Last edited by Martha Drum; Feb. 20, 2013, 12:50 PM. Reason: sorry didn't realize so long
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                                  • #37
                                    i think WC would still be important (are least some sort of coverage) to cover the "gap" that health insurance covers.

                                    using me again as an example: if i were an employee and i got hurt, my heath insurance could kick in but there would be that pesky 5k deductible per year.... if i were an employee and got hurt bad enough that i couldnt work - i would expect my employer to cover that 5k and also loss of wages.

                                    so, perhaps WC will change as the health care mandate takes effect ?

                                    now, if i am an IC then all of that is of course on me.

                                    Comment


                                    • #38
                                      Originally posted by Martha Drum View Post

                                      Not to get too political, but now with "mandatory health coverage," I don't understand why we still need worker's comp. If you are injured due to ordinary risks or simple negligence, you've got health insurance (right? right?). If your employer's negligence was gross or reckless, then you should be able to sue them.
                                      Except that the mandatory health insurance is still coming from an insurance company, who are always looking for ways to get someone else to pick up the tab. I doubt that will change.

                                      Comment


                                      • #39
                                        that is one reason to have "single payer" health care - if it were all coming from the same place there would be no one to try to foist the cost to!

                                        Comment


                                        • #40
                                          Originally posted by Kwalker024 View Post
                                          If you notice I don't blame the 17 year old for not being completely aware of what legally 1099 means to her but rather where the heck her parents were. I do hold the 17 year old accountable for repeatedly doing something she felt was dangerous and then suing when she got hurt. Maybe the barn owners are complete jerks (although if they helped her acquire more horse knowledge through seminars I'd imagine they can't be that bad) but she didn't have to go into the pasture of she felt unsafe. Se could have either said no or quit and found a different job.
                                          Laying blame on the employee for not refusing to do a job that she deems dangerous (and the employer does not) is a bad idea. There is a very long history of this kind of "exploitation" of employees. Heck, OSHA exists to offer some solution better than "Hey, if the job is that bad, find another one." That's exceptionally expensive for employees--- so much so that you can find people of all stripes keeping risky jobs. It becomes expensive for employers who have huge turnover. And it ultimately becomes expensive for the society that needs to somehow feed these people perhaps crippled on a job but not killed.
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