Independent Contractor Vs Employee by sez79958


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									Quick Facts                                            Statutory Employer

QF1: Reporting wages on a 1099 form is not, by                  statutory employer under the Workers’
itself, an indication of independent contractor sta-            Compensation Law is not what is com-                                              Lewiston
tus. Other factors can be involved that will result             monly thought of as the employer. Rather,       Field Offices                     1118 “F” Street
                                                                                                                                                  Lewiston, ID 83501
in a conclusion of an employer/employee relation-      it is someone a worker can turn to for compensa-
                                                       tion if the actual employer did not have insurance                                         Phone: 208-799-5035
ship, even if the wages are reported on a 1099.
                                                       when the worker was injured. Under §72-216,              Boise                             Fax: 208-799-3482
QF2: There is no certificate of exemption in Idaho
for independent contractors.                           Idaho Code, a general contractor becomes a statu-        4355 W. Emerald St., Suite 105
QF3: A general contractor can require a subcon-        tory employer of an injured worker of a subcon-          Boise, ID 83706                   Nampa
tractor to carry a workers’ compensation insurance
policy even if the subcontractor is not required
by law to have a policy. This is a contractual issue
                                                       tractor working under him if the subcontractor
                                                       does not have the required workers’ compensation
                                                       insurance in effect. One of the primary reasons gen-
                                                                                                                Phone: 208-334-2024
                                                                                                                Fax: 208-334-3711
                                                                                                                                                  847 Parkcentre Way, Suite 7
                                                                                                                                                  Nampa, ID 83651
                                                                                                                                                  Phone: 208-442-8341
between the general contractor and the subcon-
tractor and is not regulated by the Idaho Industrial
                                                       eral contractors require certificates of insurance from
                                                       all of their subcontractors, including those who are
                                                                                                                127 W. 5th N., Suite A
                                                                                                                                                  Fax: 208-442-8344
                                                                                                                                                                                          Contractor or
QF4: It is highly unlikely that multiple workers on
a job site performing the same function (roofing,
                                                       not required by law to have insurance, is to protect
                                                       themselves from becoming a statutory employer.
                                                                                                                Burley, ID 83318
                                                                                                                Phone: 208-678-3332
                                                                                                                Fax: 208-677-3616
                                                                                                                                                  501 N. 16th, Suite 107
                                                                                                                                                  Payette, ID 83661
dry walling, etc) are each independent contractors.    This brochure is intended to answer the most                                               Phone: 208-642-0181
See QF6.                                               frequently asked questions regarding Idaho’s clas-       Coeur d’Alene                     Fax: 208-642-6163
QF5: In Idaho, an injured worker of an uninsured       sification of independent contractors and employ-         1111 W. Ironwood Drive, Suite A
subcontractor may collect workers’ compensation        ees, and may not cover your particular situation.        Coeur d’Alene, ID 83814           Pocatello
insurance benefits from the general contractor.         Contact an Employer Compliance representative            Phone: 208-769-1452               1070 Hiline, Suite 300
QF6: Improperly classifying employees as sub-          for assistance.                                          Fax: 208-769-1465                 Pocatello, ID 83201
contractors as a device to avoid paying workers’                                                                                                  Phone: 208-236-6399
compensation premiums is on the rise in Idaho.                   Idaho Industrial Commission                    Idaho Falls                       Fax: 208-236-6040
This is illegal and can result in unexpectedly large                      Main Office                             1820 E. 17th, Suite 300
premium payments due at an audit, policy cancel-                    700 S. Clearwater Lane                      Idaho Falls, ID 83404             Sandpoint
lation, civil or criminal charges, fines, and jail                     Boise, Idaho 83712                        Phone: 208-525-7248               2101 West Pine St.
time. If you have knowledge of and would like to                        1-208-334-6000                          Fax: 208-525-7013                 Sandpoint, ID 83864
report this fraudulent activity, contact the Indus-                  FAX 1-208-334-2321                                                           Phone: 208-263-5747
trial Commission at 208-334-6000.                                                    Kellogg                           Fax: 208-265-9637
QF7: In Idaho, there is no public “safety net” for                                                              35 Wildcat Way, Suite B                                               Be Sure You Know the Difference
injured employees of uninsured employers. The          Requests for this publication in alternate formats       Kellogg, ID 83837                 Twin Falls                            Definitions
injured worker’s recourse is against the uninsured     will be promptly handled.                                Phone: 208-786-4600               1411 Falls Avenue East, Suite 915     Right to Control Test
employer personally. Many employers recognize                                                                   Fax: 208-786-7110                 Twin Falls, ID 83301
that, in addition to complying with the law, main-     Information on costs associated with this publication                                      Phone: 208-736-4700
                                                                                                                                                                                        Quick Facts
taining a workers’ compensation insurance policy       are available from the Idaho Industrial Commission                                         Fax: 208-736-3053
is a smart business decision.                          in accordance with Idaho Code § 60-202.

                                                       AA/EEO Employer                   10-08/EC-AGFE/3,000

                                                                                                                                                                                       IDAHO INDUSTRIAL COMMISSION
                                                                             The Right to Control Test                                   whom services are rendered.
                                                                                                                                         Full time required—If the worker devotes
                                                                                                                                                                                                the worker’s services (beyond the profit or loss
                                                                                                                                                                                                ordinarily realized by the employees) is gener-
Introduction                                                                                                                             substantially full time to the business of the         ally considered an independent contractor.

                                                                                  n Idaho, a worker’s status as an employee or an
                                                                                  independent contractor is determined based             person for whom services are rendered, such
Whether someone who works for you is an employee or an independent                on the four main criteria commonly referred to         person has control over the amount of time the     3. FURNISHING OF MAJOR ITEMS OF EQUIPMENT
contractor is an important distinction. Generally, a person cannot be-       as “the right to control test.” Considered collec-          worker can work and impliedly restricts the        •   Doing work on the employer’s premises—If
come an independent contractor just because he or she wants to be, or        tively, the four right to control factors distinguish       worker from doing other gainful work.                  the work is done on the premises of the person
because an employer wants the person to be an independent contractor.        an employee from an independent contractor. The             Order or sequence determined by princi-                for whom the services are performed, this
It is not enough that the employee and employer agree.                       determination of status is open-ended because it            pal—If the worker performs services in the or-         shows control over the worker, especially if the
Though it may be tempting to save money by classifying workers as            requires a factual judgment over whether a case             der or sequence determined by the person for           work could be done somewhere else.
independent contractors, misclassification can have serious financial and    meets the overall test. This approach neither pri-          whom the services are performed, the worker is     •   Furnishing tools and equipment—If the
legal consequences.                                                          oritizes criteria nor specifies a minimum number             likely an employee.                                    person for whom services are performed
                                                                             that must be met. The Idaho Supreme Court has               Oral or written reports—A requirement                  furnishes significant tools, materials, or other
This publication was designed to assist in properly classifying workers in   repeatedly recognized that those cases where there          that the worker submit regular oral or written         equipment, this indicates a direct employment
the State of Idaho for workers’ compensation insurance purposes only.        is doubt about whether a worker is an independent           reports to the principal indicates control.            relationship.
Please contact one of the Industrial Commission offices on the back of       contractor or employee are to be resolved in favor          Payment of business and/or traveling ex-           •   Significant investment—If the worker invests
this brochure if you have specific questions.                                of finding the worker to be an employee.                     penses—If the principal ordinarily pays the            in facilities used in performing services and
                                                                                                                                         worker’s business or traveling expenses, then          that are not typically maintained by employ-
                                                                                                                                         the worker is usually considered an employee.          ees, this indicates an independent contractor
Definitions                                                                  1. DIRECT EVIDENCE OF THE RIGHT TO CONTROL                  Working for more than one firm at a time—               relationship.
                                                                                 Compliance with instructions—Control is
                                                                                                                                         If a worker performs service for several unre-     •   Realization of profit or loss—This factor
Determining the difference between employees and independent                     present if the person for whom the services are
                                                                                                                                         lated persons or firms at a time, this indicates        overlaps the method of payment but addresses
contractors requires a detailed analysis. According to Title 72, Idaho           performed has the right to require compliance
                                                                                                                                         an independent contractor relationship.                whether sale of the business assets would pro-
Code, “employee” is defined as any person who has entered into the               with instructions.
                                                                                                                                         Making service available to the general                vide the worker with a gain or recovery. If so,
employment of, or who works under contract of service or apprentice-             Training—Training through meetings, attend-
                                                                                                                                         public—If a worker makes services available to         he may be an independent contractor.
ship with, an employer, as opposed to an “independent contractor”                ing classes, or apprenticeship with a more ex-
                                                                                                                                         the general public on a regular and consistent
which is defined as any person who renders service for a specified               perienced worker indicates the right to control.
                                                                                                                                         basis, this indicates an independent contractor    4. RIGHT TO TERMINATE RELATIONSHIP WITHOUT LIABILITY
recompense for a specified result, under the right to control or actual          Integration—Integration of the worker’s
                                                                                                                                         relationship.                                      •   Continuing relationship—A continuing rela-
control of his principal as to the result of his work only and not as to         services into the principal’s business operations
                                                                                                                                         Competitive selection among subcontrac-                tionship between the worker and the principal
the means by which such result is accomplished.                                  shows that the worker is subject to direction
                                                                                                                                         tors—If the principal uses some competitive            indicates a direct employment relationship,
                                                                                 and control.
                                                                                                                                         means for reducing his own cost in selecting           even if the work is performed at recurring ir-
Simply put, an independent contractor is a person who provides                   Services rendered personally—If the services
                                                                                                                                         a subcontractor, then the principal may be a           regular intervals.
goods or services to another entity under terms specified in a contract.         must be rendered personally, then the right to
                                                                                                                                         prime contractor instead of an employer.           •   Right of employer to discharge—The
Generally speaking, independent contractors retain control over                  control is suggested.
their schedules and number of hours worked, jobs accepted, job                   Hiring, firing, supervising and paying as-                                                                      principal’s right to discharge the worker
performance, and how the job is ultimately completed. This contrasts             sistants—If the person for whom services are        2. METHOD OF PAYMENT                                       without liability indicates a direct employment
                                                                                 rendered hires, discharges, and pays workers,           Payment on a regular, periodic basis—Pay-              relationship.
with regular employees, who usually work at the schedule required
                                                                                 then that factor shows control over all workers.        ment by the hour, week, day, month or other        •   Employee’s right to terminate—If the worker
by the employer and whose performance is directly supervised by
                                                                                 If a worker engages his own assistants, he may          regular periodic interval generally points to an       has the right to stop working at any time with-
the employer. However, these definitions alone do not adequately
                                                                                 be an independent contractor.                           employer-employee relationship.                        out contractual liability, this is indicative of an
determine a worker’s status.
                                                                                 Set hours of work—Control is indicated if set           Realization of profit or loss—A worker who              employment relationship.
                                                                                 hours of work are established by the person for         can realize profit or suffer a loss as a result of

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