# Am I a Sub or an Employee...Help Please!



## golfprojp (Oct 18, 2011)

Hi guys I have a situation here, I have never plowed before but have been offered a job plowing for a local landscape company for approx $20 hourly driving their truck. I have winters off as I manage a golf course and this would be great additional income. My question is this: If I drive the company truck do I need any additional insurance other than my auto policy? Also, the company may want to pay me with checks written to my construction company..I started a GC business this year to be able to do a few roofing projects for referral business from when I was a storm chaser over the past few years. If he pays my company, I would have to be sure to beef up my GL policy(currently 500/500) and would I still have to get Commercial auto policy as well if I am driving his vehicles?

Sorry to be long-winded but a little worried. I prefer to be paid as an employee and have taxes taken out but they would rather 1099 me. Thank you in advance for any help! I have also considered buying a vehicle but monthly payments with insurance and truck and plow may have me working for peanuts....


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## grandview (Oct 9, 2005)

Their truck you work for them.


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## Spucel (Feb 6, 2011)

^^^ what he said


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## golfprojp (Oct 18, 2011)

Thanks guy's this is what I thought.


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## golfprojp (Oct 18, 2011)

Spucel, is this a decent rate in our market...I will be working Lombard and Naperville area mostly.


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## chevyman83 (Nov 25, 2010)

^^agreed. You drive their truck and they tell you when to work you are an employee. Their truck their insurance. As an employee you shouldn't have to do anything but show up and do as instructed.


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## Spucel (Feb 6, 2011)

golfprojp;1346135 said:


> Spucel, is this a decent rate in our market...I will be working Lombard and Naperville area mostly.


Any experience?


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## golfprojp (Oct 18, 2011)

I have plowed the golf course lots and few others but they are wide open, by no means the same as the residential apt complexs I will see this winter.


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## Spucel (Feb 6, 2011)

$20.00 a hour in someone elses truck in our market isnt bad at all. Thats what I pay my guy when Im at work.


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## 32vld (Feb 4, 2011)

Their truck their insurance.


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## White Gardens (Oct 29, 2008)

Here's the kicker though, they want to pay his company, not him.

Yes he doesn't need more insurance to run the truck, but he would still be considered a sub-contractor if he isn't on the payroll and gets a 1099 at the end of the year.

So, he would be contracted labor driving their truck, but would still be his own boss. So ultimately he doesn't necessarily work for them.

.....


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## clark lawn (Oct 7, 2005)

White Gardens;1346394 said:


> Here's the kicker though, they want to pay his company, not him.
> 
> Yes he doesn't need more insurance to run the truck, but he would still be considered a sub-contractor if he isn't on the payroll and gets a 1099 at the end of the year.
> 
> ...


you really need to read labor laws on employee vs sub contractor before it ends up costing you alot of money.


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## White Gardens (Oct 29, 2008)

clark lawn;1346405 said:


> you really need to read labor laws on employee vs sub contractor before it ends up costing you alot of money.


What do you mean. Anyone that works for me, that isn't a sub-contractor gets a W-4 and all taxes are taken out and paid.

I don't play the " I'll just give my helper a 1099 at the end of the year " game as that has gotten people in a lot of trouble around here.

....


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## second income (Sep 19, 2010)

They want to pay his "company" to save on workmans comp and gl if they are audited at the end of the year. So in order for that deal to work out, he will have to provide them with certificates showing same. If that in fact is the case then of course you would need more than $20.00 an hour. Take a 10-99 and be done with it it will be a lot less complicated./


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## grandview (Oct 9, 2005)

If he wants to pay games,just throw cash at him from the petty cash account.


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## Plowtoy (Dec 15, 2001)

If you dont have ownership in the equipment, you would be a sub, nomatter how you slice it IMO. Dont mess with the KGB, i mean IRS, they will win every timepayup


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## second income (Sep 19, 2010)

Grandview has it right


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## grandview (Oct 9, 2005)

I think you might also do a casual labor thing to,but I think the limit is 600.00


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## second income (Sep 19, 2010)

Casual labor will work out have the checks made out to a friend on occassion


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## ladder6 (Feb 3, 2010)

Cash is king! Why make the check out to your company? This means a 1099 that you must claim. Save time and effort and work out a deal for cash driving his truck. The rate is fair and I am sure it's a win-win for you both!


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## NorthernSvc's (Mar 12, 2006)

if your working per hour... being told exactly how to do the job, there are other employees of the company doing the exact same thing as you, and you are using their equipment.. you are an employee entitled to all benefits and protections... they can Pay you, and claim you however they want but the cold hard legal fact is that you are an employee, and if anything were to happen they would be *********....if they want you to be a sub and give you a 1099 at the end of the year than you should be in your truck and you should be making 3-4 times that amount...

as an employee of a company driving their truck $20 an hour is a good beggining rate...


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## grandview (Oct 9, 2005)

ladder6;1346629 said:


> Cash is king! Why make the check out to your company? This means a 1099 that you must claim. Save time and effort and work out a deal for cash driving his truck. The rate is fair and I am sure it's a win-win for you both!


That is true. But they are trying to write of the money on their taxes .


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## NorthernSvc's (Mar 12, 2006)

like i said they can do whatever they want, but if he beefs, or something happens the court will not see him as a sub but as an employee and he would be entitiled to all back pay in lost benefits... etc... this would be especially apparent if he were to get hurt while working for the company becuase he is technically on their workers comp... so the can try and skate the system how every they want but they are playing with fire.... not to mention the IRS will royally F them over with fines and penalties if they ever found out...


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## procut1 (Jan 21, 2004)

W-4 on payroll or cash.....not check to cash. not check to someone else. green cash

The only 2 ways you can do it without getting screwed


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## Plowtoy (Dec 15, 2001)

procut1;1347508 said:


> W-4 on payroll or cash.....not check to cash. not check to someone else. green cash
> 
> The only 2 ways you can do it without getting screwed


Do you not claim cash payments? Even though it is not necessary for the sub to "claim" the money if its under $600 a year doesn't mean you can't. That is still an expense to you, why not take advantage of the tax break. Its like saying "I'll pay you cash, and I will also pay your tax on it". Doesn't make sense to me.


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## NorthernSvc's (Mar 12, 2006)

I have 2 employees i pay "cash"... I give them a regular paystub, and deduct the taxes out of their cash...


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## grandview (Oct 9, 2005)

NorthernSvc's;1347623 said:


> I have 2 employees i pay "cash"... I give them a regular paystub, and deduct the taxes out of their cash...


Not against the law to do that.

Do you make them sign the back of the check and don't let them look at it?


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## Herm Witte (Jan 27, 2009)

ladder6;1346629 said:


> Cash is king! Why make the check out to your company? This means a 1099 that you must claim. Save time and effort and work out a deal for cash driving his truck. The rate is fair and I am sure it's a win-win for you both!


Great professional advice. Get with the program!


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## second income (Sep 19, 2010)

There are two sides to every business, cash and check, a good businessman deals in both


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## superdog1 (Oct 13, 2011)

*You are an employee!*

Ok, In my old life before I got the bright idea to plow snow and run lawn mowers, I was an insurance agent for over 19 years. I had a few of my commercial customers get burned for trying to claim employees as subs. If you show up when they tell you too, drive their truck, plow lots that are contracted to them and work the amount of hours they dictate, you are an employee, PERIOD!

With that being said, as long as nothing bad happens to you, or you don't get angry with them and turn them in? life is good. I also had lots of commercial customers who did the 1099 thing for years and are still doing it (its still wrong!) and have never gotten caught. When I explained to them the evil of their ways, I got the "I'll take my chances" reply. Here is a post I made in another thread that may be helpful to all of us, as I am sure 60% of the readers here either use subs, or they are one:

Ok, to try and keep it simple: A true subcontractor is someone who has their own business in the same (or vary similar) field. According to the Feds, 70% of their income has to come from a source other than you, so if they shovel sidewalks or run a snow blower on their own accounts and only help you when you get behind, they are a true sub.

If the only place that they are getting a source of income, 1099 or not, is you? then they are your employees. If their regular job is working at a Wendy's drive thru and they only help you shovel snow and don't help anyone else do that? they are your employees.

This subject has been discussed over and over here, and like any other law/rule, there are many opinions as to who or what is correct. I was an insurance agent for 19 years before I got the bright idea to be a Landscaper/Snow removal guy. That being said, I have dealt with this many times. In most cases, it starts out with a small guy who is trying to get ahead, needs the workers but knows that if they purchase workmans comp, it will price them out of work when you try and cover the cost of it in the bid price.

An accountant (some, but not all) will tell you that it is Ok to just 1099 them, as it isn't his/her behind when the **** hits the fan. The other reason is that they only understand how a 1099 works as far as paying someone and they are not specialists in insurance. I had clients that used 1099's for years and never had an issue, as it takes just the right combination of things to happen for it to ruin your day.

Most states use the same rules as the Fed's do for deciding if you have an employee or a sub when determining if you should have workmans comp insurance or not. Here is a link to a page that has 20 questions on it. By answering them, you can decide if you have a sub or employee:
http://bridgenex.com/irs-guidelines.html

Here is a link to the IRS website with the same type of thing on it:
http://www.google.com/url?sa=t&rct=j...3sSzbiPpRDtG6Q

Most of the guys that got burned and fined had a situation like this:

You have 5 guys that work for you doing snow removal. They only work for you during the winter months and are laid off every Spring. When you hired them, you explained up front what the deal was and all of them agreed that this is seasonal work and they shook hands and started working. The 2nd big snow storm, one of your crew slipped and fell on a sidewalk. He was in a lot of pain, so you drove him to the ER for treatment and dropped him off. When going through the admittance process, the nurse asks him how this injury happened? He replies "I was shoveling snow at work and I fell".

The nurse than asks for the WC policy # so she can start the claim process. The hurt worker calls you and asks for the #? you tell him "I don't have one, as I don't need it. You are a sub-contractor" and you hang up. At this point, if your worker agrees that he is a sub, the hospital will make him sign a paper that says he is responsible for all the bills relating to this injury, he gets fixed up and life goes on..............or does it? Maybe? If he is a man of his word, he will pay the bill and everything is good?

The second ending could be different, and is usually the one that happens. Once the sub realizes that he is now responsible for the $1500 bill if he signs the paper, he tells the nurse "This is crazy! it happened at work and my employer is the one who needs to pay this" Since you don't have a WC policy # to use, they treat him and refer it to their billing dept. Some times you will get lucky and the hospital will give you a chance to pay the bill and they go away. Most times they will call you and ask again for the WC# and when you don't have it, they tell you "We'll get back to you"

The people in the billing dept deal with this all the time and know exactly who to call! our good old friends at the state WC bureau. They then assign an investigator to it and you get a phone call from them asking you to set up a time for an audit. The WC person will then decide whether or not you have an employee or a sub after looking at your books. You obviously know what happens next if they determine you have an employee.

Another scenario is when you hire someone and then after watching their performance, realize you made a mistake by taking this person on. They either get pissed off at you for firing them, or, short on cash, they apply for unemployment. This can also have some disastrous results, as the same thing happens in the first example I gave you. It just comes at you from a different place. The fines and harassment end up costing just as much, because once one state or Federal agency gets involved, they notify all the others and the train just gets longer and longer...........


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## Dodge Plow Pwr (Dec 7, 2007)

Subscribed


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## thirteen (Dec 13, 2009)

I have never seen such b.s. The subcontractor v. employee question is one of the most complicated legal questions in existence. I didn't read a single correct response here. Go see a lawyer because the test is different in every state, and very, very complicated. Plus, the test is different for Federal taxes vs. state taxes vs. workers comp insurance reasons.


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## superdog1 (Oct 13, 2011)

thirteen;1351758 said:


> I didn't read a single correct response here.


Then you obviously didn't read my post? What position do you hold or have held that gives you the knowledge to even post an answer in this forum. I can prove my credentials. Can you prove yours?


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## Banksy (Aug 31, 2005)

thirteen;1351758 said:


> I didn't read a single correct response here. .


Then what is the correct response? I think superdog1 hit the target quite well.


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## grandview (Oct 9, 2005)

Banksy;1351966 said:


> Then what is the correct response? I think superdog1 hit the target quite well.


Pay me cash?Thumbs Up


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## thirteen (Dec 13, 2009)

So golfprojp had a very valid question, but unfortunately asking legal advice on a website forum is likely to result in incorrect advice. The worst answer posted turned out to be the one person that was most defensive. The answer is simple, go talk to a lawyer in your state, don't rely on the advice of an insurance agent on a website.
It isn't for me to try to correct the information because that needs to be done by a lawyer in the golfprojp's state.


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## superdog1 (Oct 13, 2011)

thirteen;1352002 said:


> So golfprojp had a very valid question, but unfortunately asking legal advice on a website forum is likely to result in incorrect advice.


Well, at least there is one thing we can agree on. In this case though, the links I provided (especially the one from the IRS website) answer his question both clearly and concisely with no grey areas to navigate.



thirteen;1352002 said:


> The worst answer posted turned out to be the one person that was most defensive. The answer is simple, go talk to a lawyer in your state, don't rely on the advice of an insurance agent on a website.


I'm sorry you find my advice wrong or incorrect. I will also clarify that I am only licensed in the state of PA (I still sell insurance part time), so all of the information I have given pertains to that state. However, when it comes to the employee/employer relationship, all 50 states refer to the Federal Gov't guidelines to decide whether or not an individual is covered or should be covered by a workman's compensation policy. Federal labor law will always supersede state law. This is also the reason OSHA has power in all 50 states.



thirteen;1352002 said:


> It isn't for me to try to correct the information because that needs to be done by a lawyer in the golfprojp's state.


I will say that contacting a lawyer is sound advice, but on the other side of the coin, could you imagine the financial burden to every person on here that is, wants to be or has been a sub-contractor each time they go to work or take on a new location? It would be crazy.

The question he asked is NOT a complicated one. It does not require digging through pages and pages of case law. If he answers yes to any one of those 20 questions, he is an *EMPLOYEE*. If you would like, I could post links to many legal battles with case law showing that the individual in question is an employee. In each one of these cases, the plaintiff was in the exact same position as golfprojp's, and, the outcome was the same. These cases have also been fought in the court systems of many different states.

The reason I am being so defensive is because this isn't a complicated situation. There are no extenuating circumstances that would warrant having a lawyer review this. If I thought for one minute that I was wrong or if I thought there was even a slight chance that PART of my answer could be wrong, I also would tell him to see an attorney. I would NEVER mess with another mans livelihood or take a chance with something that important and be able to sleep at night!.

I should also point out that if golfprojp takes this job and something goes wrong, the only person that is going to have a problem would be the individual or Corp. that hired him and did the 1099 thing, NOT golfprojp! They will be the one paying the fines. Even if golfprojp gets hurt and needs to go to the hospital, the worst case would be they decide he is actually a sub-contractor and he has to pay his own medical bills, which is something he knew about before he took the job.

To answer golfprojp's original insurance question, if they hire him as, and he agrees to being a sub-contractor driving one of their trucks, he would need to make sure his current commercial auto policy covers him for snow removal. In most cases, the insurance goes with the vehicle he is using, so...... if he takes off a manhole cover with the plow, the insurance from the CO he is working for will pay out first or be primary and the insurance he has in his CO's name would be secondary. This coverage from his policy would only cover him if he had a "hired or non-owned" endorsement on his commercial auto policy. In this case, you must call your local agent and verify, as the way this coverage works varies from state to state and I Do not know if the answer I gave you is accurate


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## CGM Inc. (Dec 15, 2008)

Cash or paying the Co. also means you have no workmans comp in the event of an accident!
Get on payroll is always the best option!


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## grandview (Oct 9, 2005)

There is nothing wrong for a guy to ask questions here. Better to get conflicting answers then go in blind and accept the lawyers answers.This way you can ask some questions of him. But the guy is an employee.


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## superdog1 (Oct 13, 2011)

grandview;1352182 said:


> But the guy is an employee.


Correct! The only way he would not be one is if he owned his own plow truck, had his own route and did it before or after he drove the truck for the CO in question.


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## Banksy (Aug 31, 2005)

superdog1;1352287 said:


> if he owned his own plow truck,


What if he has his own plow truck but plows for one company exclusively at their becken call and has no plow work other than for that company?

This thread is turning into a riddle...


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## grandview (Oct 9, 2005)

Makes you an independent contractor.Or sub contractor.


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## superdog1 (Oct 13, 2011)

Banksy;1352413 said:


> What if he has his own plow truck but plows for one company exclusively at their becken call and has no plow work other than for that company?
> 
> This thread is turning into a riddle...


Sure is, Lol!



grandview;1352415 said:


> Makes you an independent contractor.Or sub contractor.


Correct. *IF* he is using his truck and gas to do the plowing. If he owns a truck with a plow, but lets it at home and only drives the other CO's truck, he is still an employee. You may be able to stretch the rules if he were to plow a few driveways with his own truck first (or even after), and THEN get into the other CO's truck and work for them. It would be best for him to get just enough driveways and lots that when you add up all of the $$ he made from the driveways he did with his truck, it comes out to the same amount or better yet, a few $$ more than what he got paid driving the other CO's unit.

But!, if you are going to go through all that, why not just skip driving for the other CO and get enough work to keep it all. He would be much better in the long run? He may have to pay for gas, wear and tear etc. and we all know what happens if you have a bad year and a tranny goes out, blow a motor or whatever, so maybe it isn't better?

*Are we having fun yet?, Lol*​


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## swtiih (Nov 30, 2008)

Just the fact that you would be driving (using their equipment) holds them liable for most anything that goes wrong. I would agree that you are an employee whether paid in cash, check or beans. 
Superdog1 's post is very informative. If I were you I wouldn't have this guy pay your company. Why would you put your company at risk for his business and truck. If you go to work for this guy under your current posts description your asking for trouble


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## grandview (Oct 9, 2005)

What the guy is doing is he's hiring his company to do work,just like if he's hiring him to do work with his construction company.So he wants to pay the construction company. Now if he hires him as an individual person, then he should have all the insurance that is needed to protect himself.


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## swtiih (Nov 30, 2008)

I get that but after he hires his company, then he is saying here is my tools (truck) to get the job done.


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## grandview (Oct 9, 2005)

No he wants to hire him and his truck .


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## second income (Sep 19, 2010)

Let's face it, there is risk in everything we do. A good business man takes certain chances to grow his business. With that being said he also needs to know how to protect his business from civil litigation ie comp cases, traffic accidents slip and falls, etc,etc. Everyone should have a leasing company own their equipment and trucks, your snow business should be separate from your lawn business or whatever other business interests you have, real estate needs to be owned by another company or your spouse and so on. There is no place for a sole proprietor in this business if you have alot to lose especially if you don't have a huge umbrella policy. This thread has evolved into one containing alot of misinformation. With that being said, take the job as a sub, take a 10-99, carry GL on your business and w/c and charge the guy more than $20 an hour to cover all of that. Will that happen , of course not take $20 an hour cash and if you get hurt be a man and don't screw the guy who gave you the opportunity to work under those conditions, because you fell at your house doing your driveway.


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