By Daniel Mathieu
Having talked to 1000s of businesses by now I've heard a endless variety of questions that range from asking how much premium is due next month to if they decided to start selling damaged heart pumps, would it be covered on their records store's policy. Was not exactly easy to keep my professionalism in that situation, I mean come on! Back to the point of this write up, the most common questions I get, undeniably, is how to classify a worker as an employee or a 1099 subcontractor.
Without fail, once a week I have someone calling, asking and expecting an instant answer. It is more complicated than that but to protect my client and me, if I was only able to give one answer without any follow up questions I would say to always classify them as an employee and get workers compensation.
To give a little more details let me give a real world example. I had a friend from college who started his own cabinet installation company and had started to do very well. After going at it alone he hired some "subcontractors" to help him with his job. Since he figured they were only subcontractors he didn't obtain workers comp insurance for them and went along with his business. On a job one day while installing a set of cabinets one of the subcontractors had a cabinet fall on him and breaks his leg along with tearing a ligament. So do you think the "subcontractor" is going to go out of his own pocket to pay for this? Me neither. The sub-contractor went after the employer and my friend had to pay all the medical bills and lost wages.
So why did he have to pay this? The IRS has exact language as to what is an employee and what is a sub-contractor and since my friend told him how to do the job, when to show up and the injured party had no other jobs, he was considered an employee.
Not only was he forced to pay for all the injured parties expenses but was fined by OHSA for not having a required coverage, workers compensation.
So what does this all mean for you? How do you find out if you are supposed to have workers compensation? Either call your local agent and explain exactly how the people working for you are going about their job or contact your states Bureau of Workers Compensation and they will surely be able to help you.
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