Are you an Employee or an Independent Contractor?
This is a hot topic in the horse industry for employees and employers alike. It's important to understand the subtle differences in order to remain within the law.
Any job can be designed to be on a contractual basis and the horse industry is no exception. But how does the law determine if you are a true employee or an independent contractor? Here are some guidelines to help you become clear on the subject. Our friend Marcia Hancock from the Job Search Advisor wrote this handy article so that we can all be clear on this issue!
It's also about how you get paid - taxes out, or you pay the taxes.
Understanding the Difference
What is an Independent Contractor?
An Independent Contractor works outside of the regular workforce and is hired on a contract basis, meaning to do specific tasks and perform detailed services within a set period of time with a beginning and end date. The wage and pay rates are fixed, and the contractor decides the hours he/she will work. Terms are negotiated in a voluntary yet binding agreement with an ‘employer’, most often in writing.
Independent Contractors must provide the equipment and tools necessary to complete the agreed-upon work and must function independently and without supervision or direction. How the work is done is determined by the Independent Contractors: no on-the-job training or instructions are provided. The ‘employer’ may determine any desired result or outcome from the work.
Independent Contractors are not reimbursed for expenses related to equipment maintenance or repairs needed to perform the job. If you are a contract Farrier and your truck breaks down, you are responsible for the repairs to your truck and any damage to your equipment. Tools and equipment are replaced your expense.
Employers are not legally required to include Independent Contractors under Worker’s Compensation coverage. Contractors are also not usually covered under any defined or health and welfare benefit plans offered to regular employees.
Pay and wage rates for Independent Contractors are set with no raises or bonuses and are often determined in response to a bid. The ‘employer’ and independent contractor agree to a fixed rate of pay usually for the entire job. Independent Contractors are usually paid once per month and outside of the regular payroll cycle. Contractors may be required to submit an invoice before any payment is made. Independent Contractors are responsible for paying their own state and federal taxes and are issued 1099s by the 'employer' for the tax year in which any work is performed.
What is an Employee?
An employee is a usual part of the workforce hired to provide services on a regular and on-going basis. The work can be full time (40 hours per week) or on a part-time basis. The employee does not provide these same services to the employer as part of an independent business.
Prospective employees usually, but not always, receive an ‘offer letter’ outlining the job title, wage and pay rates, work hours, overtime eligibility, the title and name of the person the job reports to, any benefits including vacation and sick time, and a brief summary of the duties and responsibilities. No beginning or end date are outlined in an offer letter to a regular employee.
Employment is most often ‘at will’ meaning either the employee or the employer can end the job at any time for any reason. You may be fired for any reason at any time with or without cause; conversely you may quit for any reason at any time.
Employees have little or no control over what they are paid or any wage rate. You accept the job as it is offered to you including how, what and when you will be paid. Employees are eligible to wage and pay rate increases and may be awarded bonuses or participate in a profit sharing program.
Employees are supplied the tools and equipment necessary to do a job and are reimbursed for any out-of-pocket expenses related to the job. If you are a Groom and you need new brushes and bandages to do your job, your employer provides the materials you need to fulfill your job requirements.
Employees most often will receive special and/or on-going training and direction as needed to do a job.
Worker’s Compensation coverage is provided to employees as required by the law in the state in which the employee lives, works or is injured. Employees are eligible to participate in any defined or health and welfare plans an employer may extend to regular employees. Benefits may include vacation and sick time, medical and other benefits, retirement plans be it a 401K, 403b or other defined benefit plan.
* Beginning/End Dates
* Own Equipment/Supplies
* No Training
* Negotiate Fixed Wage/Pay Rate
* Determines When, How, Where
* No Worker’s Compensation or Benefits
* 1099 issues, Contractor Pays Taxes
* Performs Exclusively One Job
* Sets Own Hours
Common Independent Contractor Horse Industry Jobs
* Veterinarians * Farriers
* Trainers * Jockeys
* Performers * Braiders
* Exercisers * Some Stable Services/Clinics
* Offer Letter
* ‘At Will’
* Provided Tools/Equipment
* Special Training
* Employer Sets Wage/Pay Rate/Raises
* Employer Sets When, How, Where
* Worker’s Compensation + Benefits (If Offered)
* W-2 issues, Employer Deducts Taxes
* May Work Other Jobs As Needed
* Full Time/Part-Time
Examples of jobs that are most often Employees:
* Barn Managers * Grooms
* Assistant Barn Managers & Staff * Riders
* Exercisers (race track) * Stable Workers
Marcia Hancock, The Job Search Advisor
Specializing in writing resumes, biographies, curriculum vitae (CV) and other resume-like documents for self-employed professionals and employees within the horse industry.
Disclaimer: The contents of this article are opinion only and based on the experience of the article's author and not to be construed as legal advice in any respect. Consult an attorney before taking action based on the contents of this article. Marcia Hancock and Professional Equine Grooms, LLC expressly disclaim all liability in respect of any actions taken or not taken based on any contents of this article.