As I continue to build up all the articles on Employees I came across this situation that really happened. But first I am going to remind you oof my own personal story, before telling you this pet sitter’s story.
If you are reading this and are either:
(a) Trying to decide which way to go
(b) Have Independent Contractors (ICs)
Then this article is for your eyes and brain. Please read this and understand the financial implications that a company incurs when choosing to have independent contractors. Especially in the pet industry. Pets that my own staff had been visiting every day in the middle of the day, every week, had a moment and SNAP causing over $29,000 in medical bills. I would probably be out of business if I had independent contractors when that incident happened.
MYTH: IC’s cost less.
FACT: The cost of your labor is 100% dependent on what you decide to pay. (*This all goes out the window if your IC gets hurt)
MYTH: I will only get good workers if I pay a lot of money.
FACT: If you pay a lot of money, you will attract people who are motivated by money.
As Paul Harvey used to say…and now, the rest of the story
told from a fellow and very well respected pet sitter in California:
If a company “hires” staff as IC’s, even if the IC has their own medical coverage, you, the employer, can still get into hot water.
Here is a real example of what happened to a pet sitter I know in California. This pet sitter hired employees. About 4 years ago one of her employees was going out to get the client’s mail, slipped and fell. Long story short, she broke her leg in two places, needed surgery, was in a skilled nursing facility for about 4 months.
Now, the owner of the pet sitting company did not offer health insurance (nor are they required to offer health insurance in case anyone is wondering). Yes, the employee had her own medical insurance.
Had the employee put this through her own medical insurance, the second her insurance company learned it happened on the job, they would be going after the pet sitting company for reimbursement.
Because the owner of the pet sitting company hired employees, she had them covered under WC, as required in the Sate of California. All of the injured employee’s medical bills were covered by WC .(I don’t know what the final bill was on all of this, but the first bill for just the first 3 or 4 days of hospitalization was over $10K). Also, one of the provisions with WC is that an employee cannot try to later sue the employer for their injuries.
Had this employee not been covered by WC, the employee could sue the owner. Even if the employee’s own medical insurance paid for her injuries, they would turn around and go after the owner of the company for reimbursement. The owner of the company would easily have been out of business in a heartbeat.
I would think long and hard, especially in the State of California, before anyone decides to classify their workers as IC’s. The State of California has previously told me “pet sitters” are employees and not IC’s. The State of California does not care how the IRS views it.
So you see, this is why it i very important to seek wise counsel. When I coach pet sitters I tell them they can answer their own question about the IC v Employee debate by simply answering this question:
How much risk are you willing to take?
If you can answer this question, there your answer will be. No matter how many documents you have ICs sign, no matter how much you call training “suggested procedures” it is a matter of time before something happenes in your business where you are forced to prove yourself in a court of law. Whether it be the state or feds, their sole job is to get you to say something wrong to incriminate yourself. Personally, I don’t want to take that risk. Personally, I want the control in my business and that is why I chose employees.