Posted by Germ on February 20, 2011 at 07:28:33 from (24.29.233.5):
In Reply to: O/T Workers Comp. ins. posted by 37 Chief on February 19, 2011 at 23:07:13:
It depends on which state you are in. In Ohio, the state runs W Comp with several options. Check on your state"s website or talk to your insurance agent about your specific needs. If still in doubt, spend an hour with an attorney that practices labor law.
You have lots of advice in this thread, some good, some not good.
Several below mentioned setting a worker up as a subcontractor. It can be done, but if not done exactly to the IRS standards, it will come back to haunt you in the form of back taxes for FICA/ Medicare and FIT withholding. Since these were not paid on time, you will get penalties, interest and possibly assessments and they will want the money and they have the means to get it. When the IRS is through, you will get to answer at the state level for Unemployment/ W Comp, and state tax withholding. More penalties and interest. The IRS is really cracking down on this. I doubt that someone you hire for occasional use will fall under the subcontractor category. Check the IRS site for the specific rules.
A part timer that doesn"t fully understand and meet the sub contractor requirements will be upset when they get a 1099 in January and realize they will have to pay both halves of the FICA/ Medicare taxes. If they get hurt and find out they are not covered under W Comp, you will probably be hearing from a lawyer and the results could be expensive.
Workers Comp seems expensive when you are paying, but it is dirt cheap if you ever have a big claim. Are you willing to gamble everything you own?
I"ve been in business over 25 years and I"ve seen many come and go trying to circumvent the system. Everyone of them got caught sooner or later. The downfall always started with an injury that should have been covered under W Comp or when they filed for unemployment.
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