Basicall the new law is to make it harder to justify someone as a sub and not an employee. The unions really pushed this new law hard! This is the advice my CPA gave me........This is a "gray" area for many.
In a nutshell, if you can control what, when, how, and where someone does work for you, then that person is an employee. Otherwise they may be an independent contractor. If you pay someone to do this, then you need the following up front:
1 Certificate of Insurance
2 Social security number, name and address
3 They should also bill you on their invoice that shows their business name (it could be letterhead)
4 They should give you a contract for the work to be done
5 You should get a business card from them as well
If you can't get those things, then you really need to think about whether someone is an employee or not. Even if you can justify treating someone as an independent contractor, but cannot get a certificate of insurance, then you will have to pay worker's compensation premiums on them........
Which makes me wonder how some of the larger companies can call the guys in their own truck a sub when the company controlls when, what, where, and how they do the work!?
This is not a new law. Maybe Tom Corbett is enforcing it more.
After I started my own business, we got auidited by UC. They looked at our bank checking accounts for regular payments to people. They looked at how our employees pay periods and timesheets were done.
We heard from our accountant that a quilt shop was busted for paying people to make quilts.
About ten years ago a shopping center I worked at as maintenance was bought out. I quit and moved on. But the other two guys stayed.
The new company paid them as sub contractors. The company even bought a general libility policy to cover if something happened. The guys were paid like $10.00 per hour. They worked the mall hours and did regular duties each day. They would have to pay thier own taxes and if they were injured on the job no comp.
Well one of the guys got into a verbial fight with the owners. The owners told him he was fired and leave the property.
He drove right over to the local UC office and filed for UC benefits.
Long story short, the company was fined and had to pay all his back taxes and he got umemployment.
If you pay someone for performing a duty, make sure they have insurance, an EIN and a company invoice for payment.
With the state of government, they need all the money we can throw their way.
This is a new law, passed by big Eddie. It takes effect in February. I have it in a PDF but it's to big of a file to upload. If someone wants it I'll be happy to email it, but Keystone hit on some of the high points. It will also affect homeowners higher shady contractors. If the guy gets hurt on your property he could accuse you of being his employer and not having the proper insurance.
First off i have been having a realy hard time i was a sub for 8 years this season was my first year as a contractor. And boy has it been hard....with this info yous have posted it makes more sense......i have not heard anything about this in chicago,il but i will put money on it that its the same thing......