Our Blog | Dave Mosher & Associates

Independent Contractor or Employee?

February 8, 2012

Independent Contractor or Employee?

Tom Calley, CIC

A person is required to meet a nine-part test before he or she is considered an independent contractor rather than an employee. A person is not an independent contractor just because they say they are, or because the contractor over them says they are, or even if regulators like the federal government say so. To be considered an independent contractor and not an employee, an individual must meet and maintain all nine of the following requirements:

1) Maintain a separate business with his or her own office, equipment, materials and other facilities

2) Obtain a Federal Employer Identification Number (FEIN) from the IRS, or have filed business or self-employment tax returns based on the work or service in the previous year

3) Operate under contracts to perform specific work or services for specific amounts of money with the independent contractor maintaining control over the means of performing the work

4) Be responsible for operating expenses under the contracts

5) Be responsible for satisfactory performance of the work under the contracts

6) Be paid per contract, per job, by commission or by competitive bid

7) Be subject to profit or loss in performing the work under the contracts

8) Have recurring business liabilities and obligations

9) Be in a position to succeed or fail if business expense exceeds income

In Wisconsin, if you are not an employer yourself, and you do not meet all nine parts of the test, you are considered an employee of the employer that you are working under/for, not a sub-contractor or independent contractor.

If You Hire Independent Contractors

If the contractor you hire does not carry their own worker compensation policy, you can run the risk of being considered their employer. Remember, the burden of proof, and especially the risk of penalties and higher worker compensation premiums lies with you as the general contractor. If the contractor you hired is deemed to be your employee, you will have to pay the worker compensation premium for them. You could also be subject to fines or penalties. Be sure to ask questions based on the ‘nine point test’ above, and always obtain certificates of insurance.

Submitted By: editor

Disabled? Me? Never!

January 19, 2012

Disabled? Me? Never!

Do you have the disability coverage you need? Even if you are already covered by a disability income insurance policy, you may still need more protection. This worksheet can help you determine how much you’ll need, or you can calculate your need online at www.halfapaycheck.com.

Enter your annual take-home pay from wages & salaries from all jobs you hold	$
Add your annual contributions to a tax-deferred payroll savings plan, such as a 401(k) or 403(b)	+
Add any annual pre-tax contributions that you make to a flexible-spending account to help meet medical or child-care costs	+
Add any bonuses, commissions or freelance income	+
Your total income	$
Multiply by this figure, an estimate of the income you would need to protect	X 0.70
Your total disability income insurance need	$
Subtract the annual after-tax benefit of your group LTD plan, if any*	-
The additional disability income insurance coverage you need**	$

*If your employer pays for your group LTD, you can estimate the after-tax benefit by multiplying the benefit by 0.75.

**Actual amount would be based on allowable issues and participation limits.

David Mosher, CLU, ChFC

Submitted By: editor

General Contractors, Subcontractors and Workers Compensation Audits

January 11, 2012

General Contractors, Subcontractors and Workers Compensation Audits

Tom Calley, CIC

A number of insurance carriers are now charging a premium to the general contractor on audits for any subcontractor who is hired and does not have Workers Compensation coverage in place during the audited policy term. Historically, they did not charge for the Workers Compensation exposure if the subcontractor indicated that it did not have employees and they produced a certificate of insurance verifying that General Liability coverage was in place during the audit period. Over the last several years, the courts have increasingly ruled that coverage would be afforded from the general contractor’s Workers Compensation policy if a subcontractor or their employees were injured while working for the general contractor. Because of this, many companies are now charging a premium for the exposures to all uninsured subcontractors. As a general contractor, you need to be sure you collect Certificates of Insurance for General Liability and Workers Compensation coverage for any subcontractor you hire or bring on the jobsite. Subcontractors need to remember that they also become a general contractor as soon as they hire anyone to the jobsite.

As the general contractor, you will be responsible for Workers Compensation insurance for the subcontractors or independent contractors you hire, unless you have a valid certificate showing that they carry their own workers compensation insurance. It is critical to ask for their certificate proving coverage prior to allowing them to begin the job. If you do not have proof, you will be providing the subcontractor and his/her employees coverage through your own policy. Look over the certificates very closely and obtain a new certificate if the current one expires before the end of the contract. The only way to not pay workers compensation premiums for a worker is to have proof they are covered under another policy at the time they are performing a service for you.

Document the fact that you’ve hired subcontractors or independent contractors that have workers compensation insurance. Auditors specifically look for uninsured subcontract labor when conducting the workers compensation audit at the end of the policy term. You will find the questions they ask will uncover the uninsured subcontractors. If you do decide to hire an uninsured subcontractor, remember to factor in the cost of covering their Workers Compensation insurance into your company’s contract with the subcontractor. The cost may be very hard to quantify, but the avoidance of paying the actual injury claim and/or fines for an uninsured subcontractor’s employee, will be well worth the time spent.

Submitted By: editor

Towing Coverage

December 28, 2011

Towing Coverage

By Thomas Nelson, Producer

We live in a mobile world; we depend on our cars and trucks every day to safely transport us to and from: work, school, grocery shopping, fun times, etc. These vehicles that we depend on some times: fail to start, get flat tires, have dead batteries and occasionally we lock ourselves out of them.

When our vehicle fails us and we have to call someone for help, do we have any coverage in our auto policy to pay for this? If you have purchased “towing roadside assistance” then yes you have the coverage to pay for these services.

It’s important however, to be clear on how to report an incident to your insurance company. If the insurance company provides you with a phone number to report a need for service you will need to use that number or risk a reduced payout. For example: we had a motor home owner who had a water pump failure on the interstate, he called a towing company directly and had his motor home towed to the nearest repair shop. He had a roadside assistance program on his auto policy with an #800 to call in case of an incident. The insurance company paid $100 towards the towing but would have paid the entire towing charge of $675 had the insured utilized the #800. Consult your agent if you have any questions as to whether or not you have this coverage and how to properly use it.

Submitted By: editor

Extended Care Insurance

December 21, 2011

Extended Care Insurance

Have you talked to your advisor about extended care insurance? Most people don’t realize how time consuming extended care can be for their families. If the need arises for someone in a family to depend on extended care, then loved ones have no choice but to set aside their lives to provide assistance and/or supervise professional assistance on a 24 hour basis. This creates serious consequences within a family, including illnesses to the caregivers and forcing family members to put their lives aside to take care of a loved one over a period of years. Extended care has a tendency to tear families apart instead of bringing them closer together in this type of situation. With extended care insurance you could help your loved ones by providing a way to care for your needs without their giving up anything. It is a promise to a surviving spouse or child(ren) that you will be taken care of in an extended care situation both financially and physically as to not burden your loved ones.

David Mosher, CLU, ChFC

Submitted By: editor