Cohousing-L Mailing List: RE: Re: paying babysitters and liability

[Sue Pniewski (SPniewski]

David- this thread was instituted to discuss premise liability.
The context of employee vs. contractor was used in the discussion of whether
or not the communities could be sued under premise liability for
employer/employee relationships.
You are probably correct in doing a whole lot of research in determining the
employee/employer status of people you pay to do work.  I did work for many
years as a tax attorney, and have been through quite a few audits on this
subject, and from that personal experience, I believe that what I
recommended would be sufficient for the IRS.  But the IRS loves your money,
so by all means, if any communities want to pay employment taxes, they will
get no argument from the IRS. More is always better for the IRS.  However,
the two are unfortunately linked as far as premise liability goes.  If you
admit the employer/employee relationship, it will be very difficult to try
to deny it should you be sued under premise liability.  This opens up a
whole different area of concern.  
Trust me, the medicare/SS taxes on casual labor even with penalty might come
to $200, but if you get sued because some guy fell off a ledder in your
employ, on your ladder, you're looking at a minimum of $500,000 liability.  
So I guess it's your call.
And no, I don't agree the people you pay are employees.  To seal the deal,
you should let them choose their hours, you can suggest a time, but if they
choose their hours to some extent, have signed the IC agreement, and have
completed the forms so you can file a 1099, and they work at different
areas, there is not going to be some IRS investigator snooping in your yard
to see what these guys are doing.  I suspect you are worrying way too much
about the IRS in this case, and not enough about what happens if they are
injured. 

ANd no, most people don't have their babysitters sign an agreement, but most
people aren't a corporation with a significant assets they neet to protect
either. 

-------------------------------------
Susan Pniewski, Esq.



-----Original Message-----
From: David Mandel [mailto:dlmandel [at] pacbell.net]
Sent: Thursday, September 18, 2003 2:59 AM
To: cohousing-l [at] cohousing.org
Subject: Re: [C-L]_Re: paying babysitters and liability



Sue:
    What's with this "under your theory" business? I was merely summarizing
the very conventional legal distinction between employee and independent
contractor, plus noting that many employers have gotten in trouble for
trying to wrongly treat someone as a contractor. It happens all the time. I
can tell you're a zealous advocate for your clients, as you should be, but I
think your tone here is a little over the top for a list where we're both
trying to help cooperative communities wade through a potentially sticky
subject.
    Of course I agree with you that hiring an occasional baby-sitter doesn't
trigger the need to pay employment taxes, though I've never heard of a
parent asking a baby-sitter to sign an independent contractor agreement. But
I do think a regular child care arrangement in which the pay exceeds the
quarterly threshold would trigger a FICA withholding obligation (that is
typically ignored in such situations, to the potential peril of future
candidates for public office).  And the line between them is not always
sharp.
    Perhaps I should have given a concrete example, so now I will share the
one that's on my mind, because we've been wrestling with it. We are paying
several community members to do rot-preventive caulking and painting work on
the trim of our houses. One of them, designated to be in charge of the
project on behalf of the community, tells the others what needs to be done,
monitors their work and supplies (from community funds) the tools and
materials necessary. The workers have no particular experience or expertise,
and the job requires only a moderate amount of skill. We pay them all at an
hourly rate and reserve the right to limit how much they work in a given
quarter to avoid having to withhold FICA and pay unemployment insurance. Our
research convinced us that they're definitely employees, not independent
contractors, so in various important ways we must treat them as such. Do you
agree in this case?
David Mandel
Southside Park, Sacramento

----- Original Message ----- 
From: "Sue Pniewski" <SPniewski [at] Habijax.com>
To: <cohousing-l [at] cohousing.org>
Sent: Wednesday, September 17, 2003 6:34 AM
Subject: RE: [C-L]_Re: paying babysitters and liability


>
> If you explicity contract the person to be an independent contractor, they
> can NOT sue you on premise liability successfully using the
> employer/employee standing.  The IRS has nothing to do with premise
> liability.
>
> As for the IRS and tax liability, if they are casual labor, not a
scheduled
> employee, and the place of work may vary, and there is no contract for a
> length of employment, you can make a very good argument that they are a
> contractor.  A  babysitter who occasionally comes to your place, drives
> themselves, gets paid by the event, not a salary, and who provides their
own
> insurance etc., is not going to be classified as an employee.
> Under your theory, every person hiring a babysitter so they can go out for
> the evening is liable for employment taxes.  This is silly, and not what
the
> IRS intends.  It is not feasable that everybody who hires a babysitter
> complete employment forms and the IRS does not have the capacity to handle
> that kind of paperwork in any case.  If you specifically contract to be an
> independent contractor, and follow the guidelines, the IRS risk is
minimal.
>
>
> This is from your article:
> Should I use written agreements when I do independent contract work for
> clients?
>
> Absolutely. Using a written agreement avoids disputes by providing a
written
> description of the services you're supposed to perform, when they are to
be
> performed and how much you will be paid.
>
> A written independent contractor agreement can also help establish your
> independent contractor status. Although an agreement by itself is never
> enough to make a worker an independent contractor, it will help show the
IRS
> and other agencies that both you and the hiring firm intended to create a
> hiring firm-independent contractor relationship, not an employer-employee
> relationship.
>
> When this agreement is combined with the facts of their employment it is
> enough.  Advising that an agreement is not necessary, or that it is not
not
> going to do any good is just WRONG.
>
> -------------------------------------
> Susan Pniewski, Esq.
> General Counsel
> Habitat for Humanity of Jacksonville
>
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