One other to really think about how to make the distinction is this: Are you hiring an individual or a business? If you're paying an individual to do work for you, there's a good chance that they're NOT an independent contractor. If you're paying a business then they probably are. And to clarify: I don't mean adding a company name will resolve the issue.
If the person you're hiring is setting up a *business* to answer support calls for you and for others, and is actively seeking other clients in addition to you, then that's an independent contractor. They should also provide all their own tools and so on. If the person is setting at home, answering calls only for you, has no intent to go out and add other clients, etc. etc. etc. then they're an employee, and need to be treated as such. Many states have a specific way that you can verify the independent contractor status. In Montana, it's very simple: Each worker has to be covered under a worker's compensation policy, or they have to get an "Independent Contractor Exemption" from the state. Both of these options have specific requirements. I.E. If you're covered by a work comp policy, then you're someone's employee and they should be paying employee taxes on you. If you're a independent contractor then you have to apply and be approved for the exemption. See http://erd.dli.mt.gov/workers-comp-regulations/montana-contractor/independent-contractor-central-unit/16-erd/montana-contractor/180-what-is-an-independent-contractor-exemption.html. -forrest On Wed, Mar 5, 2014 at 2:26 PM, Hass, Douglas A. <d...@franczek.com> wrote: > To clarify, contractors *can* punch a time clock. There's no black and > white rule against this. The key is WHY are they punching a time clock? > For instance, there might be situations where you require the contractor to > track hours so you can bill a customer or keep statistics on service calls > or efficiency. That could be o.k. > > > > To be clear, though, *very few people qualify as independent contractors*. > > > > Speaking from my experience litigating and counseling employers on these > cases, it is not uncommon for a worker whose contract has ended to apply > for unemployment benefits or for an individual to seek worker's > compensation benefits because of an injury incurred while on the > "contracting" job. The state or local workforce agency will not consult > you, your accountant or the IRS. Instead, the first question the intake > clerk will ask the person is "Where do you work?" The clerk will look at > wage reporting records and see no earning reported and that often leads to > an investigation that does not end well. > > > > Audits are expensive. Fines are expensive. Back wages and punitive > damages are expensive. Paying withholding taxes is cheap! > > > > Last year, one of my clients filed for bankruptcy and liquidated because > all those "contractors" they were paying in their construction business > started coming out of the woodwork asking for overtime, and unemployment > benefits, and other damages. Please don't be a statistic! > > > > Doug > > > > > > Douglas A. Hass > Associate > 312.786.6502 > d...@franczek.com > > Franczek Radelet P.C. > * Celebrating 20 Years | * > > *1994-2014 * > 300 South Wacker Drive > Suite 3400 > Chicago, IL 60606 > 312.986.0300 - Main > 312.986.9192 - Fax > www.franczek.com > > > *Franczek Radelet is committed to sustainability - please consider the > environment before printing this email * > ------------------------------ > *Circular 230 Disclosure: Under requirements imposed by the Internal > Revenue Service, we inform you that, unless specifically stated otherwise, > any federal tax advice contained in this communication (including any > attachments) is not intended or written to be used, and cannot be used, for > the purposes of (i) avoiding penalties under the Internal Revenue Code or > (ii) promoting, marketing or recommending to another party any transaction > or tax-related matter herein. * > ------------------------------ > For more information about Franczek Radelet P.C., please visit > franczek.com. The information contained in this e-mail message or any > attachment may be confidential and/or privileged, and is intended only for > the use of the named recipient. If you are not the named recipient of this > message, you are hereby notified that any dissemination, distribution, or > copying of this message or any attachment thereto, is strictly prohibited. > If you have received this message in error, please contact the sender and > delete all copies. > ------------------------------ > > *From:* wireless-boun...@wispa.org [mailto:wireless-boun...@wispa.org] *On > Behalf Of *Justin Wilson > *Sent:* Wednesday, March 05, 2014 3:10 PM > *To:* WISPA General List > > *Subject:* Re: [WISPA] remote employee > > > > It's my understanding that contractors can't punch a time > clock. > > > > Provided you have the legal stuff worked out have him use a > ticket system which logs hours. If you don't have one fresh books is web > based and pretty cheap. You can keep track of projects, open support > tickets, bill based upon those tickets, notes, all kinds of things. > http://www.freshbooks.com > > > > Justin > > > > > > *From: *heith petersen <wi...@mncomm.com> > *Reply-To: *WISPA General List <wireless@wispa.org> > *Date: *Wednesday, March 5, 2014 at 1:39 PM > *To: *WISPA General List <wireless@wispa.org> > *Subject: *[WISPA] remote employee > > > > So, we finally got our former local tech set up at his office at his > new home 3 hours away. He has tunnel access into our net, access to billing > and his VoIP phone tied to our switch to make and receive calls on our > local lines, just like he did when he sat 10 feet from me. So next is to > fine tune things. > > > > We dumped him as a regular employee and moved to contract labor with no > benefits, basically bumped him to a level where his pay per hour covered > what he received via benefits, like insurance and vacation. Makes it easier > for the accountant as she just cuts a check and doesn't have to deduct > taxes, however it now becomes his responsibility to claim wages and pay the > taxes. > > > > What we are working on now is management. My boss wants him to log > everything he does and pay from there, but to me that seems to be a lot of > work. We have a web based time clock, but I already have issues with techs > forgetting to clock in or clock out, I cant imagine it would be better > having a guy clock out after every single support call. Our phone system > can log time on the phone and where the calls went to, but of course a guy > can be busy updating firmware and re-configuring equipment without being on > the phone. > > > > The guy really only wants to clock 4 hours a day, but I need him available > off an on during the day. He is unique and he could sit at home all day. I > would almost just pay him 4 hours flat a day to sit and have him there and > available, but the bosses want to pay him for only what he works, which I > think puts more load on us deciphering logs to see what he actually worked. > > > > Anyways kind of a first for us, and maybe a last. Just wondering what > others, if any, have done. I don't want to lose the guy because he takes > care of a lot of stuff when I am gone and I don't have to train him. > > > > thanks > > heith > > _______________________________________________ Wireless mailing list > Wireless@wispa.org http://lists.wispa.org/mailman/listinfo/wireless > > > _______________________________________________ > Wireless mailing list > Wireless@wispa.org > http://lists.wispa.org/mailman/listinfo/wireless > >
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