employee or I/C contract

[J in Florida]

Does anyone have an independent contractor agreement with a trainee, elements of which they would like to share? Do they include non-compete? I'm considering hiring one and need a good contract. Anyone can email me directly at comps27@hotmail.com

Thanks!

J

 

[Wally Jones]

Can a trainee be considered an Independent Contractor? Might want to review the Internal Revenue Code.

Be careful.

 

[Richard Carlsen]

This is a little long but one that might be worth making a copy of for future reference.
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Common Law Rules

The following are a list of 20 questions the IRS uses to determine if a worker is an independent contractor or employee. The answer of yes to any one of the questions (except #16) may mean the worker is an employee.


1. Is the worker required to comply with instructions about when, where and how the work is done?


2. Is the worker provided training that would enable him/her to perform a job in a particular method or manner?


3. Are the services provided by the worker an integral part of the business' operations?


4. Must the services be rendered personally?


5. Does the business hire, supervise, or pay assistants to help the worker on the job?


6. Is there a continuing relationship between the worker and the person for whom the services are performed?


7. Does the recipient of the services set the work schedule?


8. Is the worker required to devote his/her full time to the person he/she performs services for?


9. Is the work performed at the place of business of the company or at specific places set by the company?


10. Does the recipient of the services direct the sequence in which the work must be done?


11. Are regular oral or written reports required to be submitted by the worker?


12. Is the method of payment hourly, weekly, monthly (as opposed to commission or by the job?)


13. Are business and/or traveling expenses reimbursed?


14. Does the company furnish tools and materials used by the worker?


15. Has the worker failed to invest in equipment or facilities used to provide the services?


16. Does the arrangement put the person in a position or realizing either a profit or loss on the work?


17. Does the worker perform services exclusively for the company rather than working for a number of companies at the same time?


18. Does the worker in fact make his/her services regularly available to the general public?


19. Is the worker subject to dismissal for reasons other than non-performance of the contract specifications?


20. Can the worker terminate his/her relationship without incurring a liability for failure to complete the job?

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Source: http://ohioline.osu.edu/cd-fact/1179.html

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If you are thinking about trying to make someone an independent contractor, better study these closely.

 

[Joe Birrell (NY)]

There is one other thing the IRS dosn't tell you about, it's called "Safe Harbor" which means if you are following a practice that is followed by others in your trade, your "safe" - HOWEVER, check with a good accountant on this. In addition, the IRS "safe harbor" thing dosn't get you off the hook with your state ! I had a bad experience with this about 10 years ago. I had a written IC contract with an appraiser which clearly indicated he was an IC. One day, he filed unemployment with the state and showed me as his employer. Needless to say, this got the ball rolling. What a mess ! I went to court to fight it (New York State Department of Labor Court), and lost. The state notified the Feds, and the feds wanted
retroactive social security taxes (not payroll taxes). The whole thing was weired and the feds eventually let me off the hook. It's a hit or miss, wind direction thing. Since then, it's one of the reasons I go it alone.

 

[Randy Beigh]

J in Florida

If you are going to be in business, then you should act like a businessperson. In this case, that means doing what is legal as well as the correct thing to do.

As has been posted by the others, it is highly unlikely that a trainee could ever be an IC. This is further complicated by the trainer signing off as the "supervisor" on the Fannie forms. An IC by all logic can't have a supervisor.

Yes, IRS will let some people off as was stated, but other agencies won't such as many state unemployment agencies.

Bottom line is, this isn't worth the trouble or the future trouble. It is a pain to set it up correctly, but once done, it's just part of the business.

You do need to adjust your fee split(or howver your paying) accordingly as you don't want to lose money.

 

[Leon Stewart]

The IRS had a big investigation of Appraisers several years ago about this same problem. It's just common sense that a person can't come into your shop, use your facilities and be considered an independent contractor. What happens if the trainee stump his toe on your desk and decides to go file a claim with Workmen's Comp., or if you decided that he's not working out and you have to lay him/her off, and he/she decides to file for unemployment, and in both cases the trainee will find out that they were not covered. Then you got the State on your Case. It's never worth these type of headakes.

leon