Janet Lee

Janet Lee
Photo:Janet Lee, injured by a taxi partition.

Saturday, April 02, 2016

Independent Contractor (Self-Employed) or Employee?

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Independent Contractor (Self-Employed) or Employee?

According to the IRS, the answer to this question is critical. It is a critical question for cab drivers. Cab drivers who are saddled with many obligations that only actual employees are subject to, and none of the benefits.
It is also a critical question for taxi regulators who assert the authority to control drivers in many ways that would only hold weight IF the taxi driver were an employee, with none of the obligations of an employer.
Taxi drivers are not employees.
But taxi drivers are treated that way, when regulators compel taxi drivers to work at specific times, use specific equipment, utilize certain vendors and/or, be put out of work - summarily, for charges involving suspicion of racism- without a hearing.
It is critical that business owners correctly determine whether the individuals providing services are employees or independent contractors.
Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. IRS
Select the Scenario that Applies to You:
·         I am an independent contractor or in business for myself
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed. For more information on your tax obligations if you are self-employed (an independent contractor), see our Self-Employed Tax Center.
·         I hire or contract with individuals to provide services to my business
If you are a business owner hiring or contracting with other individuals to provide services, you must determine whether the individuals providing services are employees or independent contractors. Follow the rest of this page to find out more about this topic and what your responsibilities are.
Determining Whether the Individuals Providing Services are Employees or Independent Contractors
Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -
·         An independent contractor
·         An employee (common-law employee)
·         statutory employee
·         statutory nonemployee
In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
Common Law Rules
Facts that provide evidence of the degree of control and independence fall into three categories:
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Behavioral rules compel one to understand that the company renting taxi equipment (taxis) is not the entity that asserts ‘control’ of the taxi drivers’ activity and the manner of that activity. There is a business relationship between taxi driver and taxi owner that is similar to any car rental agencies. The vehicle owner has no control over the activities of the taxi driver nor of the patrons of car rental agencies. The vehicle operator is not an employee of the vehicle owner.

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

The operators of rented vehicles (taxis or other cars) actually pay the owners of the vehicles in question, not the other way around. No expenses are reimbursed; no tools or supplies are provided.

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

There are written contracts, which do not involve pensions, insurance and vacation pay.


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