In that particular case, they are saying that employing someone in that manner is NOT an IC, they are a W-2 employee and you must follow the rules for them as an employee.
If they are a true business selling their services to multiple people and in control of their own work and you are an individual with no business stake, you generally do not have to file a 1099 - but if there’s any gray area you may want to take some care that they are acting as a business and filing their taxes that way, depending on your personal situation and stakes.
Note that many people might have their personal horse operations set up as “businesses” to manage a buy/sell scenario, to deduct the expenses against the eventual resale. This might be a situation where you would want to be filing those 1099s.
If they pass the IC test and they’re paying all their taxes as they should, then you’re golden. If they’re not paying their taxes and they don’t pass the tests when someone comes inquiring then you’re in a world of hurt.
Please note that having someone working for you part-time is not sufficient for them to count as an IC.
The issue of an injury, which you asked about in another message, is usually about avoidance of Workman’s Comp. That’s going to be enforced at the state level. The tricksy thing is that personal health insurance (if the person has it at all) generally does not cover an injury on the job, and basically once one of these entities (insurance, state labor board, IRS) uncovers the nest it tends to be that all the entities with related interest become aware as well.
Again, I’m not your tax advisor, I’m just raising awareness of a particular tar pit that may be worth asking your personal professionals about.
Independent Contractor vs Employee is a pretty big deal in employment law/taxes as of recent. I’m pretty sure there are lawsuits with Uber (and other “gig work”) over this exact thing. While a horse facility just operating on it’s own may not draw attention - as soon as something goes a little sideways (injury to someone at the facility, disgruntled customer, etc), these types of things cause problems.
Just going down the rabbit hole here because I’m curious, but if someone is an IC, isn’t the person paying them not required to have workman’s comp? Wouldn’t the worker’s personal health insurance be what covers them at that point?
I agree, people can be treated well and be happy by just good people like you and like me doing right by the people we interact with. Best case scenario is to never interact with those protections on either side.
Just remember, “Regulations are written in blood” and every one has a story around it. There are certainly people out there who intentionally choose to employ vulnerable non-citizen folk, and I’ve seen it both with unauthorized as well as H1-B visas that are tied to the employer, who specifically like to do so because it gives them a lot of ugly power over their workers. So the fact that you and I don’t need the rules to treat people right doesn’t mean that there shouldn’t be rules.
FWIW I did have an employer once upon a time who missed payroll, made certain promises, and ended up owing the (future) spouse and I rather a lot of money. I was deeply deeply grateful and appreciative of the nice folk at the California labor board (I forget the exact name of the agency), who, steel fist in velvet glove, saw through the lies that were being told immediately, and told the nice folk that either they would pay us within the week or the State would collect the money from their accounts for us.
Didn’t cost us a penny, and I could tell she was very satisfied to help us with this.
But boy howdy, I learned there and then, payroll is sacred, and I never want to be on the other side of that!
Based on my experience, no. The health insurance company will try to find someone else at fault so they can collect from them. Usually the property owner. Had it happen after a bad riding accident that happened on a friend’s property; insurance called me a few days after I got out of the hospital, while I was still on heavy pain killers, and tried to pressure me into saying that the accident happened because of her negligence. Which was absolutely untrue; it was my fault entirely.
I think some people will have told on themselves for counting that work off without filing a 1099. It’s an auto red flag when there isn’t another business counting it too.
Varies by state WRT WC coverage. Contractors aren’t covered, usually. In my state the employee ( not IC) headcount is 5+ before WC is required. In California it’s one.
Can you PM me the name of the insurance company? I worked in health insurance for 31 years and never ran into a company that did this. I would be interested in knowing who to avoid working for in the future.
Generally the companies I worked for only went after BO, HO, if the injured person was sueing them. The thought was that the insurance company should not pay the current and potential medical bills if the injured person received compensation to cover those bills. Basically the injured person should not be able to double dip. Many lawyers use the full billed amount to justify the settlement amount. Therefore if the hospital billed $100,000, but accepted $60,000 as payment in full with the injured party only oweing $5000 for the out of pocket limit, the lawyer would slant it that the injured party owed $100,000 not the $5000 out of pocket. Therefore the lawyer might get 33%/40% of $100,000 not of the $5,000 which was their client’s actual injury amount
This was in 2008. I was working for a big university that self-insures, but I am pretty sure that Blue Cross-Blue Shield administered the plan. I know several people who’ve been through this after riding accidents. No legal action involved, just the health insurance trying to get Someone Else to pay.
I can’t speak to the other poster but I had an ugly fall foxhunting , a couple over the years actually c that resulted in ER visits. One was a broken wrist.
Both times my insurance co (Fl Blue) sent me letters then called me trying to find out.if there was someone they could go after. I told them it was my horse and my tack etc on my property. The first two were true. .
That’s crazy. I’ve been fortunate (knock wood) to not have any serious accidents so haven’t had this experience. I continued to be amazed at how shitty health insurance is in this country.
This bears repeating. Very very rarely are Regulations put into place for funsies.
And that’s half the battle here isn’t it? Undocumented workers are extremely vulnerable to exploitation by their employers - if you can’t raise the alarm because you’ll get deported, and your boss owns the house, the vehicles, and pays the driver that takes you to the grocery/jobsite… that’s a lot of control they have over you. At the same time, this country has allowed itself to become extremely dependent on this population of visa-based AND undocumented workers, and “we” aren’t prepared to backfill the gaps. To me, it would make more sense to tackle this issue from the other side: how can we smooth out the legal immigration process or change the visas for the ag workers that we so desperately need. Barn/farm employees would fall into ag, after all.
But, clearly I’m not the one making decisions. I’m just wondering how long I can do this horse thing… my horses are not marketable to the type of home that is insulated from the financial stress we are about to face as a collective.
