Equine Law Blog

The Differences

“Employees” and “independent contractors” are very different.  “Employers” control and direct their “employees” as to important details of how, when, and where the work must be done.

“Independent contractors,” by comparison, carry on an independent business and contract to do particular jobs or tasks.  Those hiring independent contractors can explain the end result they want but typically cannot control or instruct the worker on how to do the job.  Farriers are good examples of independent contractors since they use their own tools, serve different customers, set their own work schedules, and have the “know-how” to do the work independently.

Risks

Just because you have labeled your worker an “independent contractor” does not mean courts or the IRS will agree.  Employers that wrongly call their workers “independent contractors” risk serious consequences, even for well-intentioned mistakes.  For example, the IRS could impose harsh financial penalties.  If the worker is injured and sues the employer claiming to be an “employee,” a court could likewise impose harsh penalties on the business.

How the IRS Evaluates the Issue

Visit the IRS website (www.irs.gov) for more information.

How to Protect Yourself

Equine industry employers can seek to protect themselves in a few ways, including:

• IRS Forms.  The IRS website provides and explains forms such as Form W-9 (Request for Taxpayer Identification Number and Certification) and Form 1099-MISC (Miscellaneous Income).
• Seek advice.  Seek help from a lawyer or accountant.  Consider asking the IRS to make the determination by submitting a Form SS-8 (“Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding”).
• Confirm the Status.  Consider using a carefully worded contract that, among other things, confirms the status and that the contractor accepts responsibility for obligations such as liability insurance, self-employment taxes, health insurance, and withholdings.