Contract employee vs employee ?? Advice

Correct. Employees will require that you withhold taxes from their pay (W2) and you will have to do the workman's comp thing.

But I would sit down with a good accountant and verify that you won't run into trouble if set your employee up as a independent contractor. Because at the end of the day, its not you who decides what qualifies as a contractor vs an employee, its the IRS. And if you're paying someone as contractor but the. IRS decide you actually have an employee, the resulting fines won't be pleasant. Proceed carefully.

 

Generally speaking, an employee uses your equipment, works under your direction, and reports on the time schedule you set up.

A contractor provides their own equipment and tools, agrees to perform a job but you don't supervise them, and they do the job within a time frame you both agree to.

As far as trucking goes, my take on this would be if you hire a driver for your truck, that's an employee and should be treated as such for tax purposes.

If you contract with a truck owner operator and they run for you under a lease agreement, then they would be a contractor and get a 1099.

Like Jgremlin said, there are finer points, but if you go to the IRS website you can read the specifics for yourself.

 

Do a little research on the FedEx Ground case . The contractors owned the trucks and paid all operating expenses but sued in several states to be classified as employees . A judge in CA ruled single route contractors were employees.FedEx then terminated all single route contracts.

 

so how did they determine to be an employee.

what difference does the route make? and how can a i/c be classified as an employee?

id idn't hear that story.

 

SMB explained it well.

If you go contract, you are resposible for workers comp.

If you go employee, you are responsible for withholding federal, social security, medicare and pay workers comp. You have to pay a match on social security also. You're not obligated to pay any benefits.

If you feel the driver should pay for any damages, get it in writing on the pre-employment to cover yourself. Unauthorized deductions are prohibited unless there is a prior agreement.

 

Is this just CA they terminated the routes? CA has their own weird laws.

 

In addition, they made all of their contractors become corporations.