How much does a grand-prix level groom make?

[MintHillFarm]

From Legal Zoom:
Common law principles further define independent contractor status by method of compensation. If a person is on an employer’s payroll and receives a steady paycheck, clearly that the person is an employee rather than an independent contractor, who likely receives payment in a different manner. Other considerations when identifying someone as an independent contractor may include:

• If the worker supplies his or her own equipment, materials and tools
• If all necessary materials are not supplied by the employer
• If the worker can be discharged at anytime and can choose whether or not to come to work without fear of losing employment
• If the worker control the hours of employment thus indicating they are acting as an independent contractor
• Whether the work is temporary or permanent

Again, the nature of the work will help define the relationship. When work is considered integral to the business, it is more likely that the person is an employee. On the other hand, work that is temporary and non integral may imply independent contractor status.

[IPEsq]

@GabbyGirl you’d want care custody and control insurance at a minimum. Think of it this way, freelance trainers need insurance, right? If you are an IC, you are a freelance groom as far as liability insurance would go.

And you you don’t have to take your employer’s health insurance just because they offer it. A lot of benefits are not mandatory. Many people do take it because the employer covers some of the premium, for example, and it winds up being better unless you hit a year where you are really getting into your deductible. But say you are married and your spouse has better insurance through their job, you can be on that plan and skip your employer’s. I’m not up to speed on the current workings of the exchange, but while not being “self employed” could change your options, you could still buy at least your supplemental coverage. As others have said, on the job injury is not something any personal health insurance will cover.

Anyway, just because you are better off financially with your current job and like some freedom to choose your health coverage doesn’t mean it’s right for your employer to classify you as an IC or that you are sufficiently protected in the case of injury or liability.

[Tiramit]

@Tackpud

Maybe this is an area that the sport integrity task force of the USHJA can do some work - create factual (hypothetical) situations and supply answers for those who are looking for them. The intricacies of worker law are difficult to understand if you’ve never read them and I’d have to say most grooms aren’t up on the current laws.

@Tackpud, wouldn’t a business section similar to “what qualifies you as an amateur” on the USHJA website be a boon? It won’t stop those who are willfully breaking the law, but could help out those who just don’t know any better and can’t / won’t invest in expert assistance.

The horse world often appears to be rife with business abuse, both openly and through exploiting loopholes. In addition to the 1099 “rules don’t apply to me” approach, I’m peeved by the LLCs and business entity misclassifications. As an example, people who have zero plans to make their 1-3 horse “barns” into businesses (lest if affect their ammie status), will set up LLCs and run horse charges though as business expenses to save on taxes. Um, sure, that’s not 100% illegal…

I own a business consulting company and we spend quite a bit of money and time remaining within the legal lines, including in our IC use. It’s long frustrated me that some people within the horse world seems to feel the industry is exempt from standard business laws. Because it’s what’s done doesn’t mean it’s legal.

[skydy]

@Tiramit

@Tackpud, wouldn’t a business section similar to “what qualifies you as an amateur” on the USHJA website be a boon? It won’t stop those who are willfully breaking the law, but could help out those who just don’t know any better and can’t / won’t invest in expert assistance

That is a good idea. If they had a section for workers that explained the difference between an employee and an IC and the liabilities that workers are exposed to by being classified as ICs, so much the better.

It seems that USEF would be the better entity to do that. I wonder if they would do it, or if it’s a subject they’d rather avoid?

[Tackpud]

@Tiramit

@Tackpud, wouldn’t a business section similar to “what qualifies you as an amateur” on the USHJA website be a boon? It won’t stop those who are willfully breaking the law, but could help out those who just don’t know any better and can’t / won’t invest in expert assistance.

The horse world often appears to be rife with business abuse, both openly and through exploiting loopholes. In addition to the 1099 “rules don’t apply to me” approach, I’m peeved by the LLCs and business entity misclassifications. As an example, people who have zero plans to make their 1-3 horse “barns” into businesses (lest if affect their ammie status), will set up LLCs and run horse charges though as business expenses to save on taxes. Um, sure, that’s not 100% illegal…

I own a business consulting company and we spend quite a bit of money and time remaining within the legal lines, including in our IC use. It’s long frustrated me that some people within the horse world seems to feel the industry is exempt from standard business laws. Because it’s what’s done doesn’t mean it’s legal.

Great idea!! I’ll pitch that too!

[short_strided]

@HonestPersonFakeAccount So, I’m an attorney and I know a lot of people who paid $100k+ to go to school and make less money than this… 1099 or not. The next time y’all are hiring call me. Lol.

[TresGauche]

@kenyarider

I have to say again, this anonymousness (is that a word?) is annoying because people can claim to be this or that and who actually knows. As far as the claims by some that I am saying things that are not true, here’s the law in my state regarding what a full time employee is:

RCW 72.01.042

Hours of labor for full time employees—Compensatory time—Premium pay.

The hours of labor for each full time employee shall be a maximum of eight hours in any workday and forty hours in any workweek.
Employees required to work in excess of the eight-hour maximum per day or the forty-hour maximum per week shall be compensated by not less than equal hours of compensatory time off or, in lieu thereof, a premium rate of pay per hour equal to not less than one-one hundred and seventy-sixth of the employee’s gross monthly salary: PROVIDED, That in the event that an employee is granted compensatory time off, such time off should be given within the calendar year and in the event that such an arrangement is not possible the employee shall be given a premium rate of pay: PROVIDED FURTHER, That compensatory time and/or payment thereof shall be allowed only for overtime as is duly authorized and accounted for under rules and regulations established by the secretary.

Kenyarider, that is 72 which is for state (funded) institutions only in Washington State. For current labor law in your state for all public and private organizations, see the WA State Dept of Labor and Industries. Over 8 a day is rarely OT in any state unless specified by union contract, private labor agreement, etc.

[BeeHoney]

Interesting thread. I’ve been in this business for…well…decades. I know extremely few people who 1099 grooms anymore, I actually can only think of one person that does. The IRS is cracking down on it, plus it’s a liability risk and a risk for tax penalties down the road. Most professionally run, upstanding businesses don’t want to deal with the penalties for breaking the law. Perhaps there are wealthy equine business owners who are so wealthy and powerful that they are above the law? I can’t speak to that. Obviously, I’m not looking at all my friends’ books, but I hire employees that have been with other barns and I get the inside scoop that way. It’s been a few years since I’ve had someone tell me that they came from somewhere where they were getting a 1099. I’ve never heard of these extremely high pay rates for grooms (1099 or otherwise), and I know grooms that have been responsible for caring for famous horses. I know people who manage high end barns for significantly less than what has been mentioned. I’m not saying those jobs don’t exist (because again, how would I know they don’t) but I’ve never seen or heard of it other than occasional anonymous comments on this board.

I understand the appeal of doing 1099s. It allows an employer to use workers without checking their immigration status and takes away the hassle of doing payroll, dealing with withholdings,etc, and it saves big $$$ in payroll taxes and workmans comp. Employees who don’t file taxes and who use fake SSNs love 1099s because they don’t have to pay taxes. But, there’s a big downside. If the IRS audits a business, the business will have to pay all those employment taxes retroactively, plus penalties. Plus, if one of your 1099 workers gets hurt, they could sue you for damages. If they have workmans comp, not only are their medical bills covered, but also they cannot sue their employer.

Really, the main reason to use 1099s for grooms is to hire illegal workers–otherwise it’s just not worth the risk. I think it’s GREAT that grooms are making a lot of $$$ in some places. But, I (and the law) have a problem with people not paying taxes. To be quite honest, we have a shortage of legal agricultural workers here in the US. Other people’s opinions may vary, but I think that we desperately need a way to get foreign workers into the US to work in a legal, documented manner. It’s not just about the taxes. While the undocumented workers in this thread who are paid via 1099 are supposedly treated very well, many undocumented workers are treated badly and/or lack basic workplace protections.

[Glorybee]

I need to quit teaching (high school) and go back to being a groom!

[meupatdoes]

@HonestPersonFakeAccount

This is wise counsel. I should note in the numbers that I previously quoted that our grooms are independent contractors. We don’t withhold taxes. We also do not provide a retirement plan or health insurance. Interestingly, we interviewed our grooms two years ago and to a man when presented with a choice of greater benefits (e.g. health insurance) or more base compensation and scheduled bonuses, they each preferred the higher base and scheduled bonuses. This has worked out well for all parties. A few of the guys have 401(K) accounts that they fund from their incomes. They pick their own health coverage - some have families, some don’t. My sense is that ours is a fairly common arrangement.

Wow, you guys need to get a better bookkeeper and CPA.

There is no way the situation you described in copious detail on the internet would pass the IRS’s independent contractor factor test, and you are exposing yourselves to a massive misclassification liability.

(I can already hear you arguing the point and in the end it’s not your factor test that controls, it’s the IRS’s.)

One groom gets hurt and innocently asks someone about disability or workers comp, one person gets let go and applies for unemployment, or one routine state or federal tax auditor asks “What’s this $200k plus in groom payments over here?” and you are going to have the IRS and your states dept of labor all over your asses like white on rice.

Good luck guys, may the odds be ever in your favor.

[jumpoff87]

TL;DR

Truly, I think the way the companies are structured for the owner dictate most of their employment policies and which company actually pays them versus who owns the horses they work with. I have a good feeling I know who HonestPersonFakeAccount works for, and I’m not surprised they have good pay that gives the employer minimal liability. There are layers of protection such as companies and trusts funding the operations vs. individuals, as well as contracts that can account for these technicalities.

Also, the grooms could perhaps be considered an independent contractor because the can decline to go to shows and choose to stay home, or they could elect to fly abroad to source horses while others choose to stay home. They can rotate tasks and days off and hours. That is a type of autonomy that could make the difference in employee categorizations. It’s like my Uber driver cancelling my ride because I’m too far away or they get someone with a better rating (aka someone who tips).

This is just my opinion. And I really don’t think HPFA deserved the mayhem that ensued from their disclosure of their experience.

[oldernewbie]

@jumpoff87

TL;DR

Truly, I think the way the companies are structured for the owner dictate most of their employment policies and which company actually pays them versus who owns the horses they work with. I have a good feeling I know who HonestPersonFakeAccount works for, and I’m not surprised they have good pay that gives the employer minimal liability. There are layers of protection such as companies and trusts funding the operations vs. individuals, as well as contracts that can account for these technicalities.

Also, the grooms could perhaps be considered an independent contractor because the can decline to go to shows and choose to stay home, or they could elect to fly abroad to source horses while others choose to stay home. They can rotate tasks and days off and hours. That is a type of autonomy that could make the difference in employee categorizations. It’s like my Uber driver cancelling my ride because I’m too far away or they get someone with a better rating (aka someone who tips).

This is just my opinion. And I really don’t think HPFA deserved the mayhem that ensued from their disclosure of their experience.

After numerous people - attorneys, business owners, people who’ve lived this topic IRL, not in the horse world - have shared their actual expertise, I am sorry that this is the conclusion you’ve reached. This area of employment law has a long and detailed set of regulations under which we all have to exist. It also has a long history of being abused. Whether someone wants to risk being caught or not is an entirely different issue from what the law says. If people want to operate under a set of opinions and assumptions rather than the law, well, I can’t feel too sorry for them if they get nailed.

And when HPFA disclosed their experience, what ensured was a discussion, not mayhem. And it was a pretty good one too.

[BITSA]

@meupatdoes

Wow, you guys need to get a better bookkeeper and CPA.

There is no way the situation you described in copious detail on the internet would pass the IRS’s independent contractor factor test, and you are exposing yourselves to a massive misclassification liability.

(I can already hear you arguing the point and in the end it’s not your factor test that controls, it’s the IRS’s.)

One groom gets hurt and innocently asks someone about disability or workers comp, one person gets let go and applies for unemployment, or one routine state or federal tax auditor asks “What’s this $200k plus in groom payments over here?” and you are going to have the IRS and your states dept of labor all over your asses like white on rice.

Good luck guys, may the odds be ever in your favor.

This–100% I have been an employment lawyer for 23 years and I couldn’t agree more. Here are the things an employer would be liable for should the state ever audit (which they can do without a complaint), or should someone sue:

Back pay hourly (if they didnt earn minimum wage in any workweek)
Back pay overtime (you cannot be salaried hourly without a specific agreement in most states) – statute of limitation vary from 1-6 years (OT is usually calculated on a 40 hour work week, but some states, like CA calculate on 8 hours a day then it’s OT)
Unemployment tax that should have been paid to the state (3 years)
Workers’ comp tax that should have been paid to the state (3 years)

I’ve seen small business hit for several hundred thousand dollars in taxes that should have been paid, plus penalties and interest.

This is a very risky way to do business and there is no way they would meet the IC test in any state or under federal law.

[meupatdoes]

@Tiramit

@Tackpud, wouldn’t a business section similar to “what qualifies you as an amateur” on the USHJA website be a boon? It won’t stop those who are willfully breaking the law, but could help out those who just don’t know any better and can’t / won’t invest in expert assistance.

The horse world often appears to be rife with business abuse, both openly and through exploiting loopholes. In addition to the 1099 “rules don’t apply to me” approach, I’m peeved by the LLCs and business entity misclassifications. As an example, people who have zero plans to make their 1-3 horse “barns” into businesses (lest if affect their ammie status), will set up LLCs and run horse charges though as business expenses to save on taxes. Um, sure, that’s not 100% illegal…

I own a business consulting company and we spend quite a bit of money and time remaining within the legal lines, including in our IC use. It’s long frustrated me that some people within the horse world seems to feel the industry is exempt from standard business laws. Because it’s what’s done doesn’t mean it’s legal.

But a lot of times people use their LLCs just to limit liability. Many if not most states allow LLCs to be formed for “any lawful purpose” and do not specify “business purpose” (NY does, which is why a NY LLC can not get 501c tax exemption).

LLCs are pass through entities anyway which doesn’t change the tax treatment from your regular taxes, unless you make an S Corp election, in which case you would really have to put yourself on payroll anyway.

I don’t think there’s anything shady about limiting your horse related liability to just your horse related assets, and not exposing your whole house and other businesses. How it gets treated when it hits your tax return is a separate as te question. And if you sell a horse for more than you paid for it, you have to recognize the income, so if you’re legit making money you have to recognize, you get to take off your expenses too.

[Midge]

@jumpoff87

Also, the grooms could perhaps be considered an independent contractor because the can decline to go to shows and choose to stay home, or they could elect to fly abroad to source horses while others choose to stay home.

In what world are grooms flying to Europe to find horses?

[TheMoo]

@Midge

In what world are grooms flying to Europe to find horses?

The same world where employment laws are really the random policies implemented by companies and business owners. Mere technicalities that can be worked around with contracts. :rolleyes:

[MHM]

@jumpoff87

Also, the grooms could perhaps be considered an independent contractor because the can decline to go to shows and choose to stay home, or they could elect to fly abroad to source horses while others choose to stay home. They can rotate tasks and days off and hours.

For that matter, in what world can a groom “decline to go to shows”? Or make their own hours? If the whole barn is going to a show, and starting the workday at 5:00 AM there, the groom who “declines” either of those things will be out of a job.

[AAHunterGal]

@MHM

For that matter, in what world can a groom “decline to go to shows”? Or make their own hours? If the whole barn is going to a show, and starting the workday at 5:00 AM there, the groom who “declines” either of those things will be out of a job.

I’ve been following this whole thread with great interest, and this is one place where I feel like I had to agree with @MHM and @Midge - I’ve had roles where part of my job was to assign groom’s their horses and schedule rotations - they could trade hours, but not horses, and any changes had get cleared through me or else it threw everything else off. When I wasn’t the person doing this in the program, there was certainly someone, even if it was one of the grooms acting as a Head Groom, who did. There was no trading on/off who did what when with what horse - it was all a program and had to be run that way.

[TheMoo]

@"A"HunterGal

I’ve been following this whole thread with great interest, and this is one place where I feel like I had to agree with @MHM and @Midge - I’ve had roles where part of my job was to assign groom’s their horses and schedule rotations - they could trade hours, but not horses, and any changes had get cleared through me or else it threw everything else off. When I wasn’t the person doing this in the program, there was certainly someone, even if it was one of the grooms acting as a Head Groom, who did. There was no trading on/off who did what when with what horse - it was all a program and had to be run that way.

Huh?

[AAHunterGal]

@TheMoo in reference to grooms being able to set their own hours and trade off when/how they worked. That was never my experience.