Monday, September 17, 2012

Are Property Cleaners Employees or Independent Contractors

Updated 9/19/12

Here in Oregon vacation rental management companies that pay cleaners as independent contractors are being targeted by the state's Employment Division with audits.  Often their audit results in a finding that the cleaners are Employees, not Contractors.

Here is what the IRS says about the topic: 

The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.”

In the past I have dealt with this issue by having independent contractors sign an agreement that says:

1)  that they are independent contractors.

2)  that they are responsible for paying their Self-Employment taxes and all other required payroll and income taxes.

3)  that I have a non-exclusive contract with them, and they have the right to do similar work for any other customer, and that it is my understanding that they plan do work for other customers.

4)  that they provide at least some of their own tools & supplies

5)  that they are responsible for all aspects of how they perform their work, and that I am only interested in the quality of the completed product or service.

This is a useful document describing how the IRS defines employees vs contractors.

Doug Coates

1 comment:

  1. Great Post! It's very nice to read this info from someone that actually knows what they are talking about.
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