Is Your Independent Contractor Legal?

Independent Contractor or Employee?

There’s a lot of misclassification in the dog walking industry of employees as independent contractors (IC’s). It may be temping to use IC’s since it seems like everybody else is doing it. But there are some pretty scary repercussions if you get caught misclassifying a worker, and I don't want that to happen to you!

Some of the reasons IC’s are favored is because you don’t need to pay taxes or workman’s compensation like you do for employees. You don't have to worry about taxes with holdings. And you don't need to add them to your insurance policy.

So many dog walkers and pet sitters make the mistake of setting up IC’s because it seems simpler, saves them money, and that’s what their colleagues are doing.

Please note the following info is geared toward U.S. based dog walking businesses. I am not a lawyer or CPA, so check with a professional on what is best for your business. My knowledge comes from my coursework in human resource management in college, continuing education on the subject as well as working as a staff director where I hired and managed employees.

What is an Independent Contractor?

Independent Contractors:

Are Self-employed and have their own business.
Have their own business license (if required), insurance and use their own equipment.
May work for your competitors as well as for themselves.
Have all the skills needed to complete the job with no instruction from you.
Complete the job how they see fit.
Are temporary workers, not long term.
Set their own schedules.

Make Sure Your IC’s are Actually IC’s and Not Employees

Independent Contractor

You don’t give them instruction on how to do their job. This means you don’t train them at all. They already have all the skills and knowledge to do the job and can complete it however they see fit.
You don’t control how they do their job.
The duties they perform should not be integral to the business (they should not perform dog walking for a dog walking company or pet sitting for a pet sitting company).

So what happens if you hire someone as an IC who is really is an employee?

State and Federal government agencies actively perform audits to find employees that have been misclassified as Independent contractors. It's no picnic if you're caught.

You’ll be held liable for all those employment taxes you haven’t been paying, plus added penalties and fees, plus interest dating back to when you should have paid.
Your IC can file a form with the IRS reporting how much you owe them for social security & medicare taxes. If you ever have a disgruntled IC, this a a huge concern.
If it’s found that you intentionally misclassified an IC, you may face a criminal penalty of up to $1000 per worker and one year in prison. You may also be held personally liable for any taxes that were not collected.

Why I Chose Employee Over Independent Contractor

When I decided to hire, I knew I wanted and needed to hire an employee, not an IC. I wanted to be able to train my staff to follow the same protocols I do, maintaining consistency for my clients. Also, as a dog walking company the job of walking dogs was no question integral to the business as the primary service offering. I also needed to assign work hours, another no-go for IC’s. And of course I wanted to have long term, not temporary help.

Hiring employees doesn’t have to be scary, and in my case, all I did was ask my accountant about payroll and she was able to let me know the details and set everything up for me on that end. I worked with my insurance company to change my policy to cover my employee. It was surprisingly easy with with help of professionals who are well versed in the requirements.