Call Us (203) 397-3993 ☰ ˟
Svendsen Insurance
Call Us (203) 397-3993
  • Home
    • Home Page
    • EPay
  • Get a Quote
  • Payment And Claims
    • Payments And Claims
    • Customer Service Forms
    • Make a Payment
  • Personal
    • Automobile
    • Homeowners
    • Personal Umbrella Insurance
    • Condominium
    • Flood
    • Renters
    • Life
    • Watercraft & Boat
    • Jewelry Insurance
  • Business
    • Business and Commercial Insurance
    • Business Interruption Insurance
    • Bakeries, Delis and Cafes
    • Commercial Property Insurance
    • Rental Property Insurance
    • General Liability Insurance
    • Contractors Insurance
    • Condo Association Insurance
    • Commercial Auto Insurance
    • Restaurant, Bar, & Tavern Insurance
    • Product Liability Insurance
    • Professional Liability Insurance
    • Workers Compensation
    • Umbrella
    • Bonds
    • D & O Insurance
    • Cyber Liability Insurance
    • Liquor Based Business
    • Inland Marine Insurance
    • Brewery Insurance
    • EPLI Insurance
  • Blog
  • Resources
    • Refer a Friend
    • Insurance Glossary
    • Preparing for Hurricanes
  • About Us
    • About Us
    • Location Map
    • Employee Directory
    • Testimonials
    • Partners Page
    • Local Events
    • Privacy Policy
  • Contact
    • Contact Us
    • Join Our Newsletter
Home > Blog > Independent Contractors – Are you classifying your employees correctly?
FRIDAY, MARCH 17, 2017

Independent Contractors – Are you classifying your employees correctly?

A recent article was written by Sarah Coli, JD, member of the Government Affairs Counsel with PIA (Professional Insurance Agents). She discussed a relevant topic many of us can relate too – independent contractors. Hiring independent contractors instead of employees is a method of saving money, especially on workers’ compensation insurance.

You all are familiar with the Uber lawsuit. Uber is now estimated to be worth $66 Billion as of July 2016. Drivers had filed suit against Uber claiming they were mis-classified as independent contractors instead of employees. Therefore, they should have been reimbursed for expenses like gas and vehicle maintenance. Uber tried to settle for $100 million but the courts refused stating that $100 million was only 10% of what was potentially owed.

The 1099

The first danger to classifying an employee is assuming that giving an employee a 1099 form makes that worker an independent contractor. The form is just how the employer classifies a worker for federal tax purposes and doesn’t mean the worker is correctly classified.

 

Two Tests to find out if your worker is an Employee or Independent Contractor

1.       The ABC Test

This test is used in Connecticut, New Hampshire, New Jersey, New York, and Vermont. Independent contractors MUST meet all 3 criteria to be classified as an independent contractor.

A.      The worker must be free from direction and control in the performance of the service, both under the contract of hire and in fact (meaning the employer can control the result of the work, but not they day-to-day operation of the individual); and

B.      The worker’s services must be performed either outside the usual course of the employer’s business or outside all the employer’s places of business (meaning the individuals pick when and where they complete the service); and

C.      The worker must be “customarily engaged” in an independently established trade, occupation, profession or business of the same nature as the service being provided (meaning the worker must be engaged in a profession that they will continue to pursue; ex: a technician will not stop their career midway through the job and start working as a nail tech).

 

2.       The Common Law Test

This test in used in Connecticut to determine who is an employee for the purpose of workers’ compensation, New York uses it for a majority of workers in the state, and New Jersey uses it for determining classification for employment taxes. The main question in this test:

“How much control does an employer have over a worker?”

The test is all about control, and if workers have a fair amount of it, then they are considered independent contractors.

It could be incredibly detrimental to an employer to mistakenly classify an employee as an independent contractor. Connecticut’s Public Act 10-12 makes it a class D felony for any employer who knowingly misrepresents one or more employees as independent contractors to an insurance company. The state can impose a penalty from $300-$600.

If you need any further information, please feel free to call us at Svendsen Agency at (203) 397-3993!

 

Works Cited:

Coli, S., JD. (2017, January). A conversation about independent contractors. PIA Professional Insurance Agents, 19-22.

Posted 2:26 PM

Tags: contract employees, business insurance, workers compensation, 1099 employees
Share |


No Comments


Post a Comment
Required
Required (Not Displayed)
Required


All comments are moderated and stripped of HTML.

NOTICE: This blog and website are made available by the publisher for educational and informational purposes only. It is not be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state. By using this blog site you understand that there is no broker client relationship between you and the blog and website publisher.
Blog Archive
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016

  • new haven(17)
  • insurance(15)
  • connecticut(14)
  • home insurance(12)
  • auto insurance(10)
  • woodbridge(8)
  • business insurance(7)
  • ct(7)
  • connecticut insurance(7)
  • homeowners insurance(6)
  • video(6)
  • what is this coverage anyway(5)
  • svendsen insurance(5)
  • restaurant insurance(4)
  • wallingford(4)
  • new haven restaurants(3)
  • homeowner(3)
  • hamden(3)
  • workers compensation(3)
  • basta trattoria(3)
  • coverage(3)
  • renters insurance(3)
  • brewery insurance(2)
  • policy(2)
  • full coverage(2)
  • business(2)
  • carpentry(2)
  • covid 19(2)
  • giving(2)
  • auto insurance ct(2)
  • kelly becker(2)
  • coverages(2)
  • contractor insurance(2)
  • local agent(2)
  • flood insurance(2)
  • holidays(2)
  • small business(2)
  • berlin(2)
  • hartford(2)
  • local connecticut(2)
  • general liability insurance(2)
  • liability(2)
  • beer insurance(2)
  • workers comp insurance(2)
  • commercial(2)
  • best insurance agency(2)
  • wellness(2)
  • employee(2)
  • small business insurance(1)
  • condo(1)

View Mobile Version
Travelers
The Hartford
Progressive
Utica National
Union Mutual Vermont
Utica First
Berkshire Hathaway Guard
Berkshire Hathaway Guard
Berkshire Hathaway Guard
Berkshire Hathaway Guard
Home| Get A Quote| Customer Service| Payments & Claims| About| Contact
27 Lucy St. | Woodbridge, CT 06525
P: 203-397-3993 | F: 203-389-9540 | info@svendseninsurance.com
Facebook LinkedIn
Logo

Powered by Insurance Website Builder