Independent cont. & workmens comp.

[Mike Sanny]

Has anyone heard of in California where if you hire an independent contractor with no employees that you have to put him on your workmens comp. for whatever trade he does for you?

 

[Desk Jockey]

Here if you can't provide a certificate of insurance then yes you'll be responsible for them on your insurance.

 

[J Scott W]

Don't know about Californai, but that was the rule in Tennessee. There was an exception if they signed a form that said they were self-insured.

 

[idreadnought]

then whats the point. just hire the guy.

 

[Lee Stockwell]

then whats the point. just hire the guy.

Because LEGALLY employing a person requires:

purchasing a rather expensive Workman's Compensation Insurance policy, which usually is handled by the agent who has your Business Liability Insurance (you DO have that, don't you?), as well as getting paperwork in place to withhold Fed, State, and SS taxes. Don't forget signing up for Unemployment taxes.

Thus informal deals or "subcontractor deals" abound.


...until the AUDIT.

Thanks,
Lee

 

[idreadnought]

If you are required to have a workers compensation plan then the only money you would be saving(untill the audit of course... been there done that.. all bad) would be your half of employemnt taxes and unemployement insurance. I pay less than 10% of wages for these two things. You can still pay by commision or piecework as its called. Just run them through as an employee.

BTW about 16 years ago I was audited and had to pay fines and back taxes on a sub contractor that was determined to have an employee relationship.

The government knows that they lose money by hire subs and they are aggresive about enfocing penalties

 

[juniorc82]

Lee is 100% correct. I have did the 1099 independent contractor thing up until now. I am too nervous to continue doing this especialy when alot of those contractors may or may not be reporting their income to the irs. The only was I will sub out or classify someone as an indy contractor is if they have a business license , and at least gen liability and preferably gen liability and work comp.
I now send all help through a temp service . The temp service withholds taxes, covers them on work comp, and pays unemployment. I find my own people and pay them through the staffing agency. Fewer 1099s to send out at the end of the year, less time at the desk doing paperwork , and its easy to make a trouble employee vanish due to the temp status so ther is no unemployement claim issues. I think they only charge me 35% of the employees hourly wage per hour as a fee which is very reasonable. I am too spooked about getting audited to take a chance paying casual help as indy contractors on 1099 status.

 

[Warren Wallace]

WE pay 7.65 % per $100 in IL. sucks !