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Email about 1099 vs. W2 and Worker's Comp

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  • Email about 1099 vs. W2 and Worker's Comp

    I received this email from Governor Insurance. I'm glad they're educating people about the dangers of misclassifying employees. The email below includes information about how to decide if you are an employee.

    "1099 vs. W-2"

    It has been brought to our attention from various clients in multiple states that the Internal Revenue Service (I.R.S.) has been enforcing the proper classification of an Independent Contractor (1099) versus an Employee (W-2).
    We definitely want to protect you, your employee's and your business...... the best way to do that is to help you understand the severity of the situation. States have different penalties for being non-compliant with Workers Compensation coverage.
    Misclassification fines in states vary. Fines can start at $1,000.00/employee per week with penalties and with out proper coverage you can also be responsible for the medical bills, lost wages and pain and suffering for an employees injuries.This can turn into you or your business being responsible for $10-100 thousands of dollars.
    **** We would like to make you aware that classifications in the Pet Service Industry are changing and simple oral or written agreements are not iron clad and can cost you tremendously as a business owner.
    These 2 simple forms can be used as references, to help you understand what is an employee vs. independent contractor:
    U S Dept. of Labor...
    Fact Sheet #13
    Am I an Employee? : Employment Relationship Under the Fair Labor Standards Act (FLSA)
    This 2 page easy read has a simplified breakdown for determining an individuals employment status as an employee or an Independent Contractor. Most importantly is the fact that the form states clearly that the U.S. Supreme Court has determined that employee status is not determined by the time or mode of pay for an individual.
    We highly recommend you review this link to determine if you have employees or independent contractors.


    How I.R.S. Form SS-8 Determines the status of a worker for
    Employment Taxes and Income Tax purposes
    IRS form SS-8 is a Federal form that can determine if the individual is either an employee or a true Independent Contractor. You will see this 57 question form will help determine the correct classification for you.
    ** (We suggest you review this with your accountant and/or attorney, for their professional opinion on determining the individuals work status.)