Worker Compensation General Question

[iiinycboi]

This relates to worker comp, but i guess its also a tax ish question.

What is an easy way to explain 1099 vs w2?

how do you classify the employee? and what is "direct control"


because my area is cracking down on worker compensation, and i got a surge of ppl coming in with stop orders buying worker comp lol. good for me i guess, but they pay 1099, and i spoke with the board, they do NOT care if they are 1099 if they are under direct control, you must buy wc.

 

[VolAgent]

Direct control means, do you control the employee?

Who sets the work hours, who sets the work to be done and how it is to be done, does the employer supervise during the work day? Does the employer provide the tools necessary to complete the job?

The more control the employer exerts, the more likely the worker is to be classified an employee and not an independent contractor.

 

[iiinycboi]

in my area, theres these brokers who are saying 1099 DOES NOT require worker's comp. and now there a lot of people who are paying them 1099 and not buying worker's comp.

i sell them a business policy but they refuse to buy the workers comp.

I usually tell them "if you tell them what time to get in and what time to get off" you need to buy workers comp.

just too many people hearing so and so from here and there and making up their own beliefs.

 

[VolAgent]

Just because you choose to pay via 1099 doesn't mean any court or regulatory body will agree with you.

Many businesses have paid substantial taxes and fines when this came to the IRS's notice. Of course, many others are never caught.

 

[Norwayguy]

Just because you choose to pay via 1099 doesn't mean any court or regulatory body will agree with you.

Many businesses have paid substantial taxes and fines when this came to the IRS's notice. Of course, many others are never caught.

And it comes to light when one of the 1099 people try to claim unemployment or workers comp. They might be please right now to be paid 1099 but when something comes up a "friend" will point them to the tests that the IRS and DOL use to determine if they are an employee.

 

[iiinycboi]

i had a few clients who claimed unemployment as a 1099, 2 years later the state said fork it over. we made a mistake you arent eligible and now you have to goto court to prove you didnt intent to "steal" unemployment.

 

[cottonland]

If an individual is indeed an independent contractor, then they should have their own worker's compensation coverage as well as general liability for the services they provide. If they don't then it's an uninsured sub and the insured is on the hook for the exposure.

When I have customers raise the issue concerning 1099 vs W2 is sends up a red flag. I simply tell them that if that's the case they need to request a certificate of insurance from the sub, otherswise they will be charged the premium for the exposure.

 

[AverageJoe]

If an individual is indeed an independent contractor, then they should have their own worker's compensation coverage as well as general liability for the services they provide. If they don't then it's an uninsured sub and the insured is on the hook for the exposure.

When I have customers raise the issue concerning 1099 vs W2 is sends up a red flag. I simply tell them that if that's the case they need to request a certificate of insurance from the sub, otherswise they will be charged the premium for the exposure.

EXACTLY WHAT HE SAID ^^ APPLIES TO US HERE IN FLORIDA

 

[Scottyj]

Or an exemption... in many states a single 1099 employee can contact the local state labor commission and file an exemption, pay a fee and you are good to not include them on your WC premium