{"id":2147,"date":"2016-01-11T16:56:47","date_gmt":"2016-01-11T16:56:47","guid":{"rendered":"https:\/\/gillespieinsuranceservices.com\/?p=2147"},"modified":"2025-04-17T12:52:57","modified_gmt":"2025-04-17T12:52:57","slug":"employee-or-independent-contractor-who-is-who-in-california","status":"publish","type":"post","link":"https:\/\/finfrockweb.com\/gis\/business-insurance\/employee-or-independent-contractor-who-is-who-in-california\/","title":{"rendered":"Employee or Independent Contractor – Who is Who in California?"},"content":{"rendered":"

You’re a small business owner, which means you might have some employees. \u00a0Fantastic. \u00a0But you also have Steve. \u00a0Who is Steve? \u00a0Steve is unique. \u00a0He works in your business just like the other employees do, but he’s a little different.<\/h4>\n

If someone were to ask you if Steve is your employee, you’d tell them No. \u00a0You’d call him an independent contractor, or a subcontractor.<\/p>\n

What makes Steve\u00a0different?<\/p>\n

There are lots of reasons. \u00a0He might be seasonal, showing up during the holidays. \u00a0He may be a salesperson, paid by commission rather than a salary. \u00a0He might be someone you’re temporarily using to help with a project, hired on an as-needed basis. \u00a0Steve\u00a0may be someone whose work you don’t monitor or control in the same way you do your other employees. \u00a0Steve may just have more flexibility with his schedule than the other employees do. \u00a0Whichever scenario applies to you, one thing is the same: you call Steve an independent contractor, or a subcontractor, and give him a 1099 at the end of the year.<\/p>\n

Everything is good and clear cut, right? \u00a0Well….. I hate to be “that guy” but I have to inform you that you might have a problem or two on your hands by\u00a0classifying Steve as an independent contractor or subcontractor, because he might actually be an employee!<\/strong><\/em><\/p>\n

Three questions naturally arise when I make this statement:<\/p>\n

    \n
  1. Who says Steve is an employee?<\/li>\n
  2. How do they determine Steve is an employee?<\/li>\n
  3. Why is it a problem?<\/li>\n<\/ol>\n

    The answer to the first question is: The State of California and the insurance companies that cover your business.<\/p>\n

    Both of these entities have great interest in this classification as it has serious\u00a0effects on how you pay your taxes, which labor laws apply, and how your insurance policy will cover you, and determine your premium. \u00a0I’m not going to get into\u00a0that just yet, because it’s for question three, and we’re only on\u00a0question one.<\/p>\n

    On to\u00a0question two: How does the State of California or your insurance company determine whether Steve is an employee or an independent contractor? \u00a0Answer: through an in-depth multi-factor method. \u00a0Here’s a table to show you what they look at, with\u00a0a few tips to make it as clear as possible:<\/p>\n