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Thread: 1099 / Workman's Comp

  1. #1
    Rich Appleton is offline Junior Member
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    1099 / Workman's Comp

    What is the name of your state (only U.S. law)? California
    I have a service & Installation company. I have an employee who works part time. He has his own business doing repair. I added him to my workman's comp insurance in doing so, did I screw up my ability to 1099 him at the end of the year? In other words, Can I add someone to my workman's comp insurance AND 1099 them?
  2. #2
    justalayman is offline Senior Member
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    You don't 1099 somebody. Either you have an employee or you have hired an independent contractor. If he is an independent contractor, he receives a 1099 to show the money you paid him. If he is an employee, he receives a W-2 that shows his earnings and deductions.



    So, to start with; is he an independent contractor or an employee? It isn't as simple as you deciding he is one or the other. There are rules in place (although confusing) to determine which he is.

    http://comptroller.illinoisstate.edu/downloads/20-factor-test-for-independent-contractors.pdf

    http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-(Self-Employed)-or-Employee%3F

    http://www.irs.gov/pub/irs-pdf/p1779.pdf

    http://www.google.com/search?q=independent+contractor+or+employee&aq=0&oq=independent+contractor+or+employee&sugexp=chrome ,mod=9&sourceid=chrome&ie=UTF-8
  3. #3
    Willlyjo Guest
    Quote Originally Posted by Rich Appleton View Post
    What is the name of your state (only U.S. law)? California
    I have a service & Installation company. I have an employee who works part time. He has his own business doing repair. I added him to my workman's comp insurance in doing so, did I screw up my ability to 1099 him at the end of the year? In other words, Can I add someone to my workman's comp insurance AND 1099 them?
    If he is an Independent Contractor, he is not an employee! Therefore, you don't have to protect him with Workers Comp. Insurance.
  4. #4
    tranquility is offline Senior Member
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    That's funny, our carrier says they do need be covered if not a corporation or covered by their own insurance. Casual labor for a house or rental is often covered by homeowner's/rental.
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  5. #5
    Willlyjo Guest
    Quote Originally Posted by tranquility View Post
    That's funny, our carrier says they do need be covered if not a corporation or covered by their own insurance. Casual labor for a house or rental is often covered by homeowner's/rental.
    You are right. An Independent Contractor should definitely have Insurance that should cover him in case of an injury he may sustain performing his duties as an Independent Contractor. If the Independent Contractor performs HIS services for the OP as a repairman, the OP does not need to provide Workers Comp. for him since he isn't considered an employee.

    However, if the Independent Contractor works for the OP part-time as part of the OP's Service and Installation Company, then he becomes an employee who must be protected by the Company's Workers Comp. Insurance.

    All places of business should have insurance protecting their liability in the event that an Independent Contractor or even a visitor off the street gets injured as a result of Company negligence.

    Hope that makes sense for you, Tran.
    Last edited by Willlyjo; 01-02-2013 at 11:30 PM.
  6. #6
    ecmst12 is offline Senior Member
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    It's much more important that OP determine if he's correctly classifying this person as an IC first, before taking any other steps. If he's doing it incorrectly, it could cost him a LOT more than WC premiums.
  7. #7
    Willlyjo Guest
    Quote Originally Posted by ecmst12 View Post
    It's much more important that OP determine if he's correctly classifying this person as an IC first, before taking any other steps. If he's doing it incorrectly, it could cost him a LOT more than WC premiums.
    It is pretty simple for the OP to correctly classify this person. He is either an Independent Contractor performing repairs for the OP or he is an employee doing service and installation for the OP's Company. He could be doing both, which would STILL require the OP to provide Worker's Comp. Insurance for the Independent Contractor/Employee. Otherwise, as I said in my last post, the OP would not be required to provide Worker's Comp. Insurance if such person were performing repairs as an Independent Contractor working for his own company.
  8. #8
    tranquility is offline Senior Member
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    Quote Originally Posted by Willlyjo View Post
    Otherwise, as I said in my last post, the OP would not be required to provide Worker's Comp. Insurance if such person were performing repairs as an Independent Contractor working for his own company.
    Working for his own corporation.
  9. #9
    Zigner is offline Senior Member
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    Willy's just throwing stuff out to see what sticks to the wall
  10. #10
    quincy is offline Senior Member
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    Quote Originally Posted by Zigner View Post
    Willy's just throwing stuff out to see what sticks to the wall
    The floor needs some serious cleaning.
    Zigner, justalayman and Antigone* like this.
  11. #11
    Willlyjo Guest
    Quote Originally Posted by tranquility View Post
    Working for his own corporation.
    The key word in all of this is "EMPLOYEE"! If the Independent Contractor IS NOT an employee, he isn't eligible to receive protection under the California Workers Compensation Act.
  12. #12
    Willlyjo Guest
    Quote Originally Posted by Zigner View Post
    Willy's just throwing stuff out to see what sticks to the wall
    It is what it is. Anyone who knows Workers Comp. law in California will agree with me. Those who don't agree with what I said in this post are ignorant and will usually respond in the way you and Quincy have, which really makes you guys look stupid.
  13. #13
    Zigner is offline Senior Member
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    Quote Originally Posted by Willlyjo View Post
    It is what it is. Anyone who knows Workers Comp. law in California will agree with me. Those who don't agree with what I said in this post are ignorant and will usually respond in the way you and Quincy have, which really makes you guys look stupid.
    Except that every time you are corrected, you back up, veer to the left or right and then pedal forward a bit until you spew more nonsense and are corrected on it. Wash, rinse, repeat.
  14. #14
    tranquility is offline Senior Member
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    Quote Originally Posted by Willlyjo View Post
    The key word in all of this is "EMPLOYEE"! If the Independent Contractor IS NOT an employee, he isn't eligible to receive protection under the California Workers Compensation Act.
    The problem is, the theory of independent contractor under worker's compensation law in California is not as easy (hah!) as making the determination under federal law for taxes. There are exceptions and rules all through the labor code and, if someone gets hurt, the onus is on the "employer" (person paying the money) to prove the person is NOT an employee. Since the costs of an injury can be catastrophic to the survival of a business and the fines are enormous if the injury is not, it is well worth the small amount paid for insurance for those who's classification can be in even the slightest of doubt.

    That's why when I hire a corporation to do the work, and they send a guy, the classification is easy. When I hire a guy, with the presumption against me (Along with special rules about rebuttable presumptions of employee for those requiring licenses.), it makes good legal and business sense to insure 1099 workers.
    TheGeekess likes this.
  15. #15
    Rich Appleton is offline Junior Member
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    1099/Workman's Comp

    I guess I wasn't totally clear. The installer has his own business But not a business that he needs workmans comp. Therefore I have added him to my companies workmans comp as a part time installer. Can I 1099 him? Or would he automatically be an employee when I added him to my workmans comp? I would much rather 1099 him if possible. He is the only person I hire and don't want to start with payroll taxes etc...

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