There are tests that employers must consider when determining whether you’ve hired an employee or a contractor.
Now, a case in the NY area makes this point very visibly and personally. The Fairfield United Soccer Association will begin to withhold taxes from payments it makes to its coaches. Tina Kelly, writing for the NY Times, reports on a decision arising from an agreement with the IRS, and one that is expected to ripple through youth soccer leagues across the country.
An employee is someone who shows up at your place of business to offer a service. You tell them how to do their job, and you supply them with tools that allow them to perform their duties.
I know that many of us don’t believe that social security will be around in 20 or 30 years. Employers fund social security via payroll taxes; payment affects benefits that will (putatively) be paid out to individuals down the road.
Board members for the soccer association faced personal liability for not having correctly judged the coaches to be employees.
This is not a position you want to be in as a business owner, or as a manager. Are your contractors really “free agents” or are they employees?
If they are your employees, let the law — and your conscience — be your guide.
(NB: I updated this post in January, 2013, so that I could link to it in my newsletter. I edited for broken links, grammar, and dialled down a bit of my self-righteous tone.)