Masonry Magazine October 2001 Page. 37
Unfortunately, this is just the tip of the iceberg. There's much more and of course, this is my summary, so I'd strongly recommend you read the rules in their entirety and form your own interpretation. Keep in mind too that virtually any criteria can be molded and altered according to individual circumstance and situation and even according to the temperament, knowledge, and experience of the agent doing the assessing (after all, this is the government we're dealing with!).
Never take anything for granted. If an independent contractor arrangement is what you're after, in addition to adhering as closely as possible to the IRS guidelines, it's also likely going to be prudent to either create or acquire an independent contractor agreement that you can use to memorialize your installer's relationship. In short, get it in writing (ever heard that one before?). Of course, have the worker sign a copy (get it notarized if possible) and keep it on file... even long after the worker has left your service (perhaps 3 to 5 years). Though these agreements may not necessarily be an absolute guarantee of employment status (and therefore may not protect you in case of an IRS audit), they can be useful in showing the intent of the parties. Also, just because you send out 1099's at the end of the year, don't think you're covered. The IRS may not recognize a Form 1099 as evidence of independent contractor status.
STILL UNSURE?
In addition to the training materials, there is also an IRS publication entitled 937 "Employment Taxes" that provides examples of work classifications for industries such as building and construction. But sometimes, even with the finest effort and the IRS guidelines in hand, the employee/independent contractor determination is still not easy (or even possible) to apply. Should you find yourself in this situation, your best bet may be to file an IRS Form SS-8. The IRS takes the information rendered on this form and makes their own determination as to whether an employer-employee relationship exists. One warning though: you could be opening a can of worms that you may later regret. The government is now more closely involved. If you didn't want an employee relationship, and the IRS determines (from your information) that indeed an employee relationship exists, then you could be irreversibly hooked. So you may want to think twice before entering in to such a binding arrangement.
IN THE END
One thing is for sure: if you're an owner and the worker under your employment winds up classified as an employee, you will almost certainly be required to comply with all federal and state labor law statutes that fall applicable to employees. This includes laying out for federal and state payroll taxes, retirement, health insurance (including worker's compensation insurance) and fringe benefit plans (independent contractors are generally responsible for their own retirement, fringe benefit plans, federal self-employment taxes, and must report income and expenses on the federal Schedule C, Profit and Loss from Business come tax time). Of course, with any employee or personnel situation of which you are unclear or concerned, it's always a good idea to consult your own legal or tax advisor for further assistance.
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MASONRY OCTOBER, 2001 37