independent contractors - Posted by earlnc

Posted by Michigan Andy on October 15, 2003 at 20:56:06:

Me Three!!

independent contractors - Posted by earlnc

Posted by earlnc on October 15, 2003 at 18:26:01:

does any body know where i can get some kind of agreement or form to have people fill out while they are painting or doing repairs to a rehab. so they’re not considered employee. or if they fall or somthing so i won’t get sued. any help would be appreciated. earlnc

independent contractors traps and pitfalls - Posted by Bill

Posted by Bill on October 16, 2003 at 22:13:11:

If you’re not careful, you might be in for a big expensive surprise. All of you.
Not to be neg., but there are a lot of things you need to know that you aren’t even aware of… for example:

  • Just because someone says they are an independent doesn’t make them one in the opinion of the state or feds.
  • Just because you say they are also does not make it so.
    *Even if you have something in writing saying it is so DOES NOT make it so.
    *Many states have specific rules regarding "independent contractors"and their “employment relationship” with whoever they are doing the work for. Often there are specific tests they must pass before the state will consider them bonafide independents. I’d say 90 percent plus of them would not pass the tests (and I’m NOT talking about contractor license tests either). Little things like filing a Schedule C, like having a federal tax ID number for their business, like having liability and workers comp insurance in force, like actually having a place of business or even a real business. There are quite a few more tests that the “taxing authorities” will use to determine if they are a “bonafide contractor” or an employee. I’d wager that 90 percent plus of these people would wind up being classified as an employee, whether they, you or any piece of paper you produce says differently.
    If they ARE classified as an employee, you’ll ultimately end up paying all that nasty payroll tax, soc. sec. tax unemployment tax, fed withholding , etc. , BUT, since they are now gone and havent paid their share, you’ll get to pay that part too, plus penalties and interest. The state and feds will say that you must pay and that you can take it up with them to get their share back.
    Also, should they get injured, suffer “stress”, or be be the target of any of a multitude of imagined or real put downs like sexism, discrimination, lay off because of age, etc, you’ll get to defend against that also.
    That being said, don’t just take my word for it, you can check on this by calling you State Dept. of Revenue and asking them specifically about contractor verses employee tests and requirements. The state will send you a big fat pamphlet on this showing you all the rules. The fact that they have a pamphlet shows you they know almost everyone is trying this angle.
    That being said, it’s done all the time by us investors, and at our own risk, and a HIGH risk it is.
    Many of us now only hire through temp help agencies. We pay the agency, and the agency has the worker on their payroll and insurance and handles all the paperwork.
    Of course you could hire a “bonafide, genuine contractor”. But that’s NOT what most of us want to do. We want the “cheap” repair done by the “handyman” who advertizes in the throw-away paper at a big discount to what the real contractor would charge.
    Bottom line- you roll the dice-you take the chance.
    Would you believe that there are actually groups of people who exploit this situation for their own profit? They look for investors who don’t know or who don’t care about the rules.
    Tread carefully.

Re: independent contractors - Posted by ed

Posted by ed on October 15, 2003 at 22:20:40:

In jersey (and i suspect elsewhere,'cause it seems to be filtering down from fed) the burden seems to be falling more and more on the property owners in many ways.

  1. regarding slip and fall…contractors could always get med insurance, but wouldn’t always cover job related. Now we can get workmans comp the same as an employee from the state. It costs money but will be more and more requied as months go by.
  2. one of the requirements for many years for contractors was to provide workmens comp for employees. this would appear on the insurance certificate mentioned in #3. this is a more dangerous area than #1. the greatest contractors sometimes hire substandard employees, then when something goes wrong the property owner finds himself in the middle of it.
    3)general liability insurance is also becoming a standard, this would be purchased by the contractor naming you as covered in case he breaks something, or drives over your neighbors john deere or something while working at your job. This certificate is issued by his insurance carrier for each job, so get one with your name on it.
    4)regarding considered an employee…I’ve gotten away from using employees and subs as much as possible, partly from the insurance/liability standpoint, but also from the IRS issue. I’m not big enough yet to deal with paperwork for employees…but if they are employees you need to do it. If they are subs, you need to get a s/s# in addition to the incurance cert. so you can send them a 1040 at the end of the year. if you dont’t, you will wind up paying their taxes (no s/s no writeoff) and possibly a fine…yep uncle wants you to help them catch the unfiling/cash contractors, and will fine you if you don’t

keep in mind that there will always be casual labor, it’s just getting harder and harder to use much of it

Re: independent contractors - Posted by Randy (SD)

Posted by Randy (SD) on October 15, 2003 at 18:54:15:

I have one I can email to you if you have Word.

Re: independent contractors - Posted by Antoine (GA)

Posted by Antoine (GA) on October 16, 2003 at 06:50:14:


Could you also send me the document. Thanks in advance.

Me four! - Posted by John Smith, IV

Posted by John Smith, IV on October 16, 2003 at 24:20:36:

Please send document. Thanks

Re: independent contractors - Posted by rehabber

Posted by rehabber on October 15, 2003 at 23:53:47:

Randy -

could you please email me a coppy too.

Re: independent contractors - Posted by rfc

Posted by rfc on October 15, 2003 at 20:11:59:

I would be interested in the document. Could I please get a copy?

Re: independent contractors - Posted by Jerry Martin

Posted by Jerry Martin on October 16, 2003 at 22:34:24:

I require worker’s comp and liability insurance certificates before work is started. Also if not incorporated I require them to complete a W-9.