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Thread: Should I charge my sub contractor

  1. Default Should I charge my sub contractor

    Should you charge a sub contractor a repair bill ?

    First time he called me" reefer shuts down" , it said over heating and he lost a good load.
    I told him go to carrier and let have a look at it.
    Second Time loosing another load same problem , because he neglected to go to carrier.This time Unit refused to start up .

    Now he went to carrier and there was not enough coolant in the unit and the water pump burnt out.

    He drove a carrier unit for another Owner and drives WG fo almost 2 years. He told me he didn't know how to check the coolant.

    It is a part of a pre trip.

    Anyhow the bill is over # 900.-

    Would he checked his Carrier and he should , there would be no problem, every driver should know how to check the coolant.


    What would you do with this so called professional driver?

    Would you charge him the bill ?

  2. #2

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    What is the relationship between yourself and the sub-contractor? Is he some mutt doing a never never lease purchase plan or is he a driver skirting taxes?

    Your responce will make a difference to my reply.

  3. Default

    Quote Originally Posted by ralph
    What is the relationship between yourself and the sub-contractor? Is he some mutt doing a never never lease purchase plan or is he a driver skirting taxes?

    Your responce will make a difference to my reply.
    He is on a 1099 schedule. There is no lease purchase

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    Harry, the way I see it...you're an EMPLOYER who along with his EMPLOYEE is trying to screw/cheat the system out of tax money.

    In Ontario and Alberta (and possibly other Provinces) there are definative questions that determine as to whether a person is a contractor or an employee and just because you pay them on a 1099 does not deem them to be a contractor. I you/your company are their only source of income then... they're an employee. If the alleged contractor has no say in what work is performed...then they are an employee. There are other questions also.


    I think you are responsable for paying for the damages...YOU OWN the equipment!

  5. Default

    Even I paid the bill, they are not employees. They are leasing my truck. But maybe the law is a little different in the US

    Most of the expediting industry in the states does it that way. It is a good way for couples to make good money until they can afford their own truck.

  6. #6

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    [quote="Harry"]
    Quote Originally Posted by ralph
    He is on a 1099 schedule. There is no lease purchase
    And to quote Harry further..." They are leasing my truck. "

    Now Harry, I know there's a HUGE difference between a lease and a lease purchase...What does YOUR contract say? Typically a lease is for a specified amount of time...if there's not a specified term and the contract can be terminated without penalty does it not become a rental agreement then?

    Again, you're the business man hiring staff to run/lease/rent (call it what ever you want) YOUR truck...what does your contract say?

  7. #7

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    I think that when your name is on the door, the registration, all documents and he can't freelance and pull for whoever he wants. You and you alone have exclusive use of the vehicle and have 100% control of dispatching this individual, the courts would tell you that as you can tell him to jump and he asks how high on the way up, you are in total control and as such he is an employee. Totally dependent and certainly NOT an INDEPENDENT operator.

    I'll look up the link for the Ontario Supreme Court ruling in McKay moving and Storage v Teamsters Canada. The judge in that case also ruled that drivers provided by a Driver Agency were also to be considered employees as they were under control by McKays.

    I'm glad the Judge ruled the way he did.
    I thought I had made a mistake until I realised that it was just an error.

  8. #8

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    http://www.irs.gov/govt/fslg/article...110344,00.html


    Employee or Independent Contractor?

    Whether someone who works for you is an employee or an independent contractor is an important question. The answer determines your liability to pay and withhold Federal income tax, social security and Medicare taxes, and Federal unemployment tax.

    In general, someone who performs services for you is your employee if you can control what will be done and how it will be done.

    The courts have considered many facts in deciding whether a worker is an independent contractor or an employee. These facts fall into three main categories:

    Behavioral Control – Facts that show whether the business has a right to direct and control. These include:


    Instructions - an employee is generally told:


    when, where, and how to work
    what tools or equipment to use
    what workers to hire or to assist with the work
    where to purchase supplies and services
    what work must be performed by a specified individual
    what order or sequence to follow


    Training – an employee may be trained to perform services in a particular manner.


    Financial Control – Facts that show whether the business has a right to control the business aspects of the worker’s job include:


    The extent to which the worker has unreimbursed expenses
    The extent of the worker’s investment
    The extent to which the worker makes services available to the relevant market
    How the business pays the worker
    The extent to which the worker can realize a profit or loss
    Type of Relationship – Facts that show the type of relationship include:


    Written contracts describing the relationship the parties intended to create
    Whether the worker is provided with employee-type benefits
    The permanency of the relationship
    How integral the services are to the principal activity
    For a worker who is considered your employee, you are responsible for:

    Withholding Federal income tax,
    Withholding and paying the employer social security and Medicare tax,
    Paying Federal unemployment tax (FUTA)
    Issuing Form W-2, Wage and Tax Statement, annually,
    Reporting wages on Form 941, Employer’s Quarterly Federal Tax Return.
    For a worker who is considered an independent contractor, you may be responsible for issuing Form 1099-MISC, Miscellaneous Income, to report compensation paid.

    The status of certain workers is specifically determined by law; these workers are known as statutory employees and statutory non-employees. See Publication 15-A, Employer’s Supplemental Tax Guide, for more information.

    If you would like for the IRS to determine whether or not a worker is considered an employee, please submit Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

    2. Q. The person I work for tells me that I am an independent contractor and not an employee. He does not make any payroll deductions or withholdings for taxes, social security, etc., when he pays me, and at the end of the year he provides me with an IRS form 1099 rather than a W-2. By paying me in this manner does it mean I am automatically an independent contractor?


    A. No. The fact that a person who provides services is paid as an independent contractor, that is, without payroll deductions and with income reported by an IRS form 1099 rather than a W-2, is of no significance whatsoever in determining employment status. Your employer cannot change your status from that of an employee to one of an independent contractor by illegally requiring you to assume a burden that the law imposes directly on the employer, that being, withholding payroll taxes and reporting such withholdings to the taxing authorities.


    3. Q. Does it make any difference if I am an employee rather than an independent contractor?


    A. Yes, it does make a difference if you are an employee rather than an independent contractor. California’s wage and hour laws (e.g., minimum wage, overtime, meal periods and rest breaks, etc.), and anti-discrimination and retaliation laws protect employees, but not independent contractors. Additionally, employees can go to state agencies such as DLSE to seek enforcement of the law, whereas independent contractors must go to court to settle their disputes or enforce other rights under their contracts.


    4. Q. When I started my current job my employer had me sign an agreement stating that I am an independent contractor and not an employee. Does this mean I am an independent contractor?


    A. No. The existence of a written agreement purporting to establish an independent contractor relationship is not determinative. The Labor Commissioner and courts will look behind any such agreement in order to examine the facts that characterize the parties’ actual relationship and make their determination as to employment status based upon their analysis of such facts and application of the appropriate law.


    5. Q. How can it be that the Labor Commissioner determined I was an employee with respect to a wage claim I filed and won, and the Employment Development Department (EDD) determined I was an independent contractor, and denied my claim for unemployment insurance benefits?


    A. There is no set definition of the term "independent contractor" for all purposes, and the issue of whether a worker is an employee or independent contractor depends upon the particular area of law to be applied. For example, in a wage claim where employment status is an issue, DLSE will often use the five-prong economic realities test to decide the issue. However, in a separate matter before a different state agency with the same parties and same facts, and employment status again being an issue, that agency may be required to use a different test, for example, the "control test," which may result in a different determination. Thus, it is possible that the same individual will be considered an employee for purposes of one law and an independent contractor under another.


    6. Q. What can I do if I believe my employer has misclassified me as an independent contractor and as a result am not being paid any overtime?


    A. You can either file a wage claim with the Division of Labor Standards Enforcement (the Labor Commissioner's Office), or you can file an action in court to recover the lost overtime premiums. In both situations, it will first be necessary to determine your employment status, that is, employee or independent contractor, before the issue of overtime can be addressed and decided. Additionally, if it is determined that you are an employee and you no longer work for this employer, you can make a claim for the waiting time penalty pursuant to Labor Code Section 203. Eligibility for this penalty is dependent upon your employment status, as independent contractors are ineligible for the waiting time penalty.


    7. Q. What is the procedure that is followed after I file a wage claim?


    A. After your claim is completed and filed with a local office of the Division of Labor Standards Enforcement (DLSE), it will be assigned to a Deputy Labor Commissioner who will determine, based upon the circumstances of the claim and information presented, how best to proceed. Initial action taken regarding the claim can be referral to a conference or hearing, or dismissal of the claim.

    If the decision is to hold a conference, the parties will be notified by mail of the date, time and place of the conference. The purpose of the conference is to determine the validity of the claim, and to see if the matter can be resolved without a hearing. If the claim is not resolved at the conference, the next step usually is to refer the matter to a hearing or dismiss it for lack of evidence.

    At the hearing the parties and witnesses testify under oath, and the proceeding is recorded. After the hearing, an Order, Decision, or Award (ODA) of the Labor Commissioner will be served on the parties.

    Either party may appeal the ODA to a civil court of competent jurisdiction. The court will set the matter for trial, with each party having the opportunity to present evidence and witnesses. The evidence and testimony presented at the Labor Commissioner’s hearing will not be the basis for the court’s decision. In the case of an appeal by the employer, DLSE may represent an employee who is financially unable to afford counsel in the court proceeding.

    See the Policies and Procedures of Wage Claim Processing pamphlet for more detail on the wage claim process procedure.


    Employee or independent contractor for tax purposes?
    Are you classifying the people performing services for your business as independent contractors for IRS tax purposes? Is it possible that they might really be employees for IRS tax purposes?
    How these workers are classified for IRS tax purposes has major tax consequences because employees and independent contractors are treated differently for IRS tax purposes. Potential disasters await your business if the worker is classified for tax purposes improperly. Improper classification for tax purposes can cause problems that could financially destroy your business. Business owners must withhold income tax on employees' wages, and must pay Social Security tax (FICA) as well as withhold the employees' portion of the FICA. They also are responsible for unemployment tax (FUTA) and must provide the employee with a Form W-2, "Wage and Tax Statement," showing the amount of wages and tax withheld for the year.

    Payments to an independent contractor that total $600 or more for the tax year must be reported by the business owner on Form 1099-MISC, "Miscellaneous Income," and filed with the IRS. A copy also must be given to the independent contractor.

    The key factor which determines whether a worker is an independent contractor is who has the right to control the worker as to how work is accomplished?

    Government entities, interested or damaged third parties, and perhaps the worker himself will often later challenge the classification as independent contractor for a variety of reasons. Enormous tax problems can result from improper classification for IRS tax purposes.

    The IRS has developed twenty common law factors which are used on a case by case basis to determine whether a worker is an independent contractor or an employee for IRS tax purposes. Independent contractors do not have to satisfy all of the twenty common law factors. It is best to think of the factors as weights on a balance scale.

    The twenty common law factors of a perfect independent contractor relationship are:

    No Instructions. Independent contractors are not required to follow, nor are they furnished with, instructions to accomplish a job.

    No Training. Independent contractors typically do not receive training by the hiring firm. They use their own methods to accomplish the work.

    Others can be hired. Independent contractors are hired to provide a result and usually have the right to hire others to do the actual work.

    Independent contractor's work not essential. A company's success or continuation should not depend on the service of outside independent contractors. An example violating this would be a law firm which called their lawyers independent contractors.

    No time clock. Independent contractors set their own work hours.

    No permanent relationship. Usually independent contractors don't have a continuing relationship with a hiring company. The relationship can be frequent, but it must be at irregular intervals, on call, or whenever work is available.

    Independent contractors control their own workers. Independent contractors shouldn't hire, supervise, or pay assistants at the direction of the hiring company. If assistants are hired, it should be at the independent contractor's sole discretion.

    Other jobs. Independent contractors should have enough time available to pursue other gainful work.

    Location. Independent contractors control where they work. If they work on the premises of the hiring company, it is not under that company's direction or supervision.

    Order of work. Independent contractors determine the order and sequence in which they will perform their work.

    No interim reports. Independent contractors are hired for the final result only. They should not be asked for progress or interim reports.

    No hourly pay. Independent contractors are paid by the job, not by time. Payment by the job can include periodic payments based on a percentage of job completed. Payment can be based on the number of hours needed to do the job times a fixed hourly rate. Payment method should be determined before the job commences.

    Multiple Firms. Independent contractors often work for more than one firm at a time.

    Business expenses. Independent contractors are generally responsible for their own business expenses.

    Own tools. Independent contractors usually furnish their own tools. Some hiring firms have leased equipment to their independent contractors so that they could show the independent contractor had their own tools and an investment in their business. This strategy won't work if the lease is for a nominal amount or can be voided by the hiring firm at will. The lease must be equivalent to what an independent business person could have obtained in the open market.

    Significant investment. Independent contractors should be able to perform their services without the hiring company's facilities (equipment, office furniture, machinery, etc.). The independent contractor's investment in his trade must be real, essential, and adequate.

    Services available to the public. Independent contractors make their services available to the general public by one or more of the following:

    1) having an office and assistants;
    2) having business signs;
    3) having a business license;
    4) listing their services in a business directory; or
    5) advertising their services.

    Profit or Loss possibilities. Independent contractors should be able to make a profit or a loss. Employees can't suffer a loss. Five circumstances show that a profit or loss is possible:
    1) the independent contractor hires, directs, and pays assistants;
    2) the independent contractor has his own office, equipment, materials, or facilities;
    3) the independent contractor has continuing and recurring liabilities;
    4) the independent contractor has agreed to perform specific jobs for prices agreed upon in advance; and
    5) the independent contractor's services affect his own business reputation.

    Can't be fired. Independent contractors can't be fired so long as they produce a result which meets the contract specifications.

    No compensation if the job isn't done. Independent contractors are responsible for the satisfactory completion of a job or they may be legally obligated to compensate the hiring firm for failure to complete.


    There is also a federal "safe harbor" rule which can exempt certain workers from the twenty common law factors. To be exempt from the twenty common law factors, a hiring firm must:

    have consistently treated the worker and similar workers as independent contractors;

    have filed all the required forms; and

    have had some reasonable basis for treating the worker as an independent contractor because there were similar rulings or court cases, or because it was an industry-wide practice or because prior tax auditors had never questioned the practices.


    If a worker clearly is an independent contractor, a complete agreement to that effect is useful and recommended; however, any agreement, no matter how well drafted and explained to each party and signed, will not change the results if a person is held to be an employee under the facts and circumstances.

    The laws surrounding the employee versus independent contractor issues are extremely complex and you should consult with a tax attorney on these issues.

    Improperly classified employees can cause business owners to end up with hefty tax penalties for nonpayment of employment tax. Those who need help deciding if their workers are employees or independent contractors can fill out Form SS-8, Determination of Employee Work Status for Purposes of Federal Employment Tax and Income Tax Withholding. The IRS will tell them if their workers are employees or independent contractors.


    And even more to worry about Harry:











    Another definition:
    I thought I had made a mistake until I realised that it was just an error.

  9. #9

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    If independent contractor status is desired, as many as possible of the following criteria should be met:

    The worker determines the hours of work and how the work is done
    The worker provides similar services to other entities
    The worker can hire other persons to perform the work and is responsible for their remuneration
    The worker has a separate office not on the payer's premises
    The worker is not eligible for benefits the payer provides to employees
    The worker is paid based on invoices issued to the payer
    Invoiced fees are determined in the same manner as for other contractors in the industry
    The worker provides all supplies and equipment or reimburses the payer for the use of the equipment
    The worker's contract terminates when a specific task or project is completed
    I thought I had made a mistake until I realised that it was just an error.

  10. #10

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    1. Instructions. A worker who is required to comply with another person's instructions about when, where, and how he or she works is ordinarily an employee. This control factor is present if the person for whom the services are performed has the right to require compliance with instructions.

    2. Training. Training a worker by requiring an experienced employee to work with the worker, corresponding with the worker, requiring the worker to attend meetings, or using other methods, indicates that the person for whom the services are performed wants the services performed in a particular method or manner; the worker therefore is more likely viewed as an employee than an independent contractor.

    3. Integration. Integration of a worker's services into business operations generally shows that the worker is subject to direction and control, which is indicative of an employee relationship. When the success or continuation of a business depends to an appreciable degree upon the performance of certain services, the workers who perform those services must necessarily be subject to a certain amount of control by the owner of the business.

    4. Services rendered personally. If the services must be rendered personally, presumably the person for whom the services are performed has an interest in the methods used to accomplish the work, as well as in the results.

    5. Hiring, supervising, and paying assistants. If the person for whom the services are performed hires, supervises, and pays assistants, that factor generally demonstrates control over the workers on the job. However, if one worker hires, supervises, and pays the other assistants pursuant to a contract under which the worker agrees to provide materials and labor and under which the worker is responsible only for the attainment of a result, this factor indicates an independent contractor status.

    6. Continuing relationship. A continuing relationship between the worker and the person for whom the services are performed indicates that an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring, although irregular, intervals.

    7. Set hours of work. The establishment of set hours of work by the person for whom the services are performed is a factor indicating control.

    8. Full-time required. If the worker must devote full-time to the business of the person for whom the services are performed, such person has control over the amount of time the worker spends working and implicitly restricts the worker from doing other gainful work. An independent contractor, on the other hand, is free to work for whom, and when, he or she chooses.

    9. Location. If the work is performed on the premises of the person for whom the services are performed, that factor suggests control over the worker, especially if the work could be done elsewhere. Work done off the premises of the person receiving the services, such as at the worker's office, indicates some freedom from control, which is more indicative of an independent contractor. However, this fact alone does not mean that the worker is not an employee. The importance of this factor depends on the nature of the service involved and the extent to which an employer would generally require that employees perform such services on the employer's premises.
    Control over the place of work is indicated when the person for whom the services are performed has the right to compel the worker to travel a designated route, to canvass a territory within a certain time, or to work at specific places as required.

    10. Order or sequence. If a worker must perform services in the order or sequence set by the person for whom the services are performed, that factor shows that the worker is not free to follow the worker's own pattern of work but must follow the established routines and schedules of the person for whom the services are performed.
    Often, because of the nature of an occupation, the person for whom the services are performed does not set the order of the services, or sets that order infrequently. It is sufficient to show control, however, if such person retains the right to do so.

    11. Oral or written reports. A requirement that the worker submit regular or written reports to the person for whom the services are performed indicates a degree of control.

    12. Payment. Payment by the hour, week, or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying a lump sum agreed upon as the cost of a job. Payment made by the job or on a straight commission generally indicates that the worker is an independent contractor.

    13. Expenses. If the person for whom the services are performed ordinarily pays the worker's business and/or traveling expenses, the worker is usually an employee. An employer, to be able to control expenses, generally retains the right to regulate and direct the worker's business activities.

    14. Tools and materials. The fact that the person for whom the services are performed furnishes significant tools, materials, and other equipment tends to show the existence of an employer-employee relationship.

    15. Significant investment. If the worker invests in facilities that are used by the worker in performing services and are not typically maintained by employees (such as the maintenance of an office rented at fair value from an unrelated party), that factor tends to indicate that the worker is an independent contractor. On the other hand, lack of investment in facilities indicates dependence on the person for whom the services are performed for such facilities and, accordingly, the existence of an employer-employee relationship. Special scrutiny is required with respect to certain types of facilities, such as home offices.

    16. Realization of profit or loss. A worker who can realize a profit or suffer a loss as a result of the worker's services is generally an independent contractor, but the worker who cannot is an employee.
    For example, if the worker is subject to a real risk of economic loss due to significant investments or liability for expenses, such as salary payments to unrelated employees, that factor indicates that the worker is an independent contractor.
    The risk that a worker will not receive payment for his or her services, however, is common to both independent contractors and employees and thus does not constitute a sufficient economic risk to support treatment as an independent contractor.

    17. Multiple service recipients. If a worker performs more than minimal services for multiple unrelated persons or firms at the same time, that factor generally indicates that the worker is an independent contractor. However, a worker who performs services for more than one person may be an employee of each of the persons, especially where such persons are part of the same service arrangement.

    18. Availability of services. The fact that a worker makes his or her services available to the general public on a regular and consistent basis indicates an independent contractor relationship.

    19. Right to discharge. The right to discharge a worker is a factor indicating that the worker is an employee and the person possessing the right is an employer. An independent contractor, on the other hand, cannot be fired so long as the independent contractor produces a result that meets the contract specifications.

    20. Right to terminate. If the worker has the right to end his or her relationship with the person for whom the services are performed at any time he or she wishes without incurring liability, that factor indicates an employer-employee relationship.
    I thought I had made a mistake until I realised that it was just an error.

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