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JMM0254
10-24-2007, 05:43 PM
I would like to hire a person to help in snow plowing this year. I have a truck and plow for this person to use. I would like to pay this person cash(1099) as an independent sub-contractor. I have been told that this is impossible to do as because I will supply the equipment, the person can not be categorized as an independent sub-contractor. That the definition of a sub-contractor is one who uses only their own tools. I could ask that he brings his own snow shovel......

Anyone have any experience with this and can offer any suggestions?

I realize I would have to have this person added to the truck insurance, I can only assume this would not be a problem. He has a clear driving record and 4 years experience in snow plowing.

I would supply the plow truck, no benefits, gas, etc., have him sign a contract stating he would be covered while driving the truck in case of an accident, but any injuries, etc. would not put the company in any jeopardy.

I really could use some help here. Thanks.

Steve
10-24-2007, 06:09 PM
It's interesting you should ask this. Just the other day I was talking with a lawn care operator who was doing something similar and paying some staff members with a 1099 form.

A problem arose with one of the employees and now the lco has to go back and pay back taxes over the couple of years he was doing this as well as penalties.

To help you avoid such an unpleasant situation I found this information online and it might help you.

These are great questions to consider. When you review them, let me know of what your reflection is on all this.

Following are the 20-points that have been established:

1. Must the individual take instructions from your management staff regarding when, where, and how work is to be done?
2. Does the individual receive training from your company?
3. Is the success or continuation of your business somewhat dependent on the type of service provided by the individual?
4. Must the individual personally perform the contracted services?
5. Have you hired, supervised, or paid individuals to assist the worker in completing the project stated in the contract?
6. Is there a continuing relationship between your company and the individual?
7. Must the individual work set hours?
8. Is the individual required to work full time at your company?
9. Is the work performed on company premises?
10. Is the individual required to follow a set sequence or routine in the performance of his work?
11. Must the individual give you reports regarding his/her work?
12. Is the individual paid by the hour, week, or month?
13. Do you reimburse the individual for business/travel expenses?
14. Do you supply the individual with needed tools or materials?
15. Have you made a significant investment in facilities used by the individual to perform services?
16. Is the individual free from suffering a loss or realizing a profit based on his work?
17. Does the individual only perform services for your company?
18. Does the individual limit the availability of his services to the general public?
19. Do you have the right to discharge the individual?
20. May the individual terminate his services at any time?

In general "no" answers to questions 1-16 and "yes" answers to questions 17-20 indicate an independent contractor. However, a simple majority of "no" answers to questions 1 to 16 and "yes" answers to questions 17 to 20 does not guarantee independent contractor treatment. Some questions are either irrelevant or of less importance because the answers may apply equally to employees and independent contractors.

From here
http://www.topechelon.com/employers/contracting_classification.htm

JMM0254
10-24-2007, 06:51 PM
So, has anyone here ever hired someone to run a plow and pay cash or 1099? I answered NO to 1-16 except for #4, #14 is a yes and no, because they bring all the other tools necessary (clothing, snow shovels, etc.) (I supply the mode of transportation only and the clients) and YES to 17-20.

Would it be better to just try to find someone with their own plow and hire them? I worry then that it will cost me as much to pay them to service the accounts as I make on each one, and also that they will take all clients themselves for next year. Both snow and mow/trim accounts (as most of my customers have both services).

Not trying to "beat a dead horse here", just looking to make an educated decision. Thanks.

Steve
10-24-2007, 07:11 PM
Quote[/b] ]So, has anyone here ever hired someone to run a plow and pay cash or 1099? I answered NO to 1-16 except for #4, #14 is a yes and no, because they bring all the other tools necessary (clothing, snow shovels, etc.) (I supply the mode of transportation only and the clients) and YES to 17-20.

Has any other lco ever hired someone to plow and paid them on a 1099? Sure, they do it all the time. I just happened to see the down side of it the other day and wow it was painful to watch when the IRS tells you, you need to fork over back taxes plus interest plus penalties.

Right now there is a big lawsuit going on with FEDEX Ground and their staff, whom FEDEX claims are contractors while the 'contractors are suing to say they are really employees and demand FEDEX pay employment benefits retroactively.

Read more on this case here (http://www.commercialappeal.com/news/2007/oct/20/drivers-lawsuit-expands-to-class/).

Quote[/b] ]Would it be better to just try to find someone with their own plow and hire them?

Ideally yes, if you wanted them to be a sub-contractor.

Quote[/b] ]I worry then that it will cost me as much to pay them to service the accounts as I make on each one,

I can totally understand your position. This is why it is so difficult to compete with others who don't play by rules.

Quote[/b] ]and also that they will take all clients themselves for next year. Both snow and mow/trim accounts (as most of my customers have both services).
You can have sub-contractors sign non-compete agreements so they can't steal your accounts.

pmblair
10-25-2007, 12:04 AM
Hmmmmm... I have worked for some companies and some of my friends and family have worked for companies in the past where we had to 1099, but after reading that, it would appear we should have been classified as employees and not contractors.

Interesting.

Steve
10-25-2007, 01:05 AM
Oh yea it's so easy for an employer to hand out 1099 forms and say you are a sub-contractor, but that doesn't make it legal.

It's fascinating stuff to know.