Homeowner doing handyman work

Frank,

The other option is to hire the individual as an independent contractor. This would require that he submit invoices for the work done. Then, he would be responsible for his own insurance. Of course, there may also be licensing requirements within your State.

An employee would typically require to be covered under the Associations liability insurance.
Additionally, you may need to carry workman's compensation insurance.
Of course, then there are the taxes that must be withheld (and the employer, the HOA, paying their share of the taxes as well).

Of course don't forget that if they are an independent contractor you need to issue 1099-misc. each year. If they are an employee you need to issue a W-2 each year.

For more info see:

Independent Contractor (Self-Employed) or Employee? from the IRS website.

Employer's Supplemental Tax Guide an IRS publication.

Employment Law Menu Page from Davis-Stirling.com (since you are from CA)

Frank,

Normally there are two basic kinds of insurance when you have employees: Insurance to protect others from the worker's negligence and insurance to protect the employee from the employer's negligence.

Your association's general liability policy should cover the association against the employee's negligence.

Workman's Compensation is the insurance that protects your association if the worker is injured on the job. Depending on the number of employees you have and the number of hours each works per week, state law may not even require this coverage (although I do not think California will miss an opportunity to gouge an employer). You may or may not also be required to pay unemployment compensation on this employee. Both unemployment and workman's comp premiums are tied directly to the employee's actual earnings, so you should not be stuck with huge premiums for either.

I have found in the past that accountants and bookkeepers are an excellent source for finding out what you are required to pay and then setting up the paperwork to get the job done.

The independent contractor idea is really not all that great. Unless this person is actively doing the same kind of work elsewhere for other clients both he and you stand to lose if anyone questions the relationship. Even if he is a legitimate contractor, your association will get sued anyway if he causes damage while working on your premises. If you should choose to go down the independent contractor road I would suggest that your first stop should be at your attorney's office.

In fact, this is one of the tests the IRS uses to determine whether a person is an employee or a contractor (self-employed).

Frank

An insurance sales person saying you need more insurance sounds right.

I do not think it is his job to dictate if the person is an employee or not.

To paraphrase Forest Gump:

"Cheap is as cheap gets."

Just bear in mind an out-of-date medical definition.
Y'all know the one I mean.

Which laws require these benefits?

"If the state does not license the individual employees of a contractor then the person doing the work for the association as an employee would not be required to have a license."

Then the HOA as the employer would require (for example) the electrical or plumbing license.

Some types of work must ONLY be performed by a licensed tradesman or a directly supervised employee of same.

Correct.

That is why I do not eat out much in SC.

When a restaurant's employee is sick they are financially forced to come to work anyway.

Food for thought re: benefits.

That's a new one on me! What is the authority behind that statement?


My question was what statutes require these benefits? BTW, you left out daycare, the company picnic, maternity leave, and free balloons for the kiddies. These are all nice things but what statutes require an HOA to provide the benefits you cited?


I am not familiar with this but it sounds like it is optional. Or would an HOA with one handyman on its payroll be required to participate? What are the mandated benefits under this plan?


That's pretty much standard in all states. Normally the employer reports how much the employee earned, the state computes the premium, and bills the employer.

When I was on the board of my association I observed that most of my fellow directors had exactly zero experience in hiring employees or engaging contractors. We had several instances where we needed to hire yet each and every time we were ready to act someone would toss out some bogus argument as to why we could not hire someone. I see some of those same arguments raised in this thread and my conclusion is that too many board members are children wearing adult clothing. Their personal fear of making a mistake prevents them from doing what is best for the association. In the case of hiring employees there is no shortage of knowledgeable people one can consult if there is a question yet almost no one seeks out qualified advice.

I haven't seen too many news reports about people being charged with felonies under these circumstances.

From what I have seen in the past, the employee is usually the one who gets hurt the worst because the IRS considers him to be the one liable for payment of taxes on his income.

The place where I have seen employers get hit hard is with workman's comp. The one case that I am familiar with involved a towing company who tried to evade paying workman's comp by claiming the drivers were independent contractors. The company furnished the trucks and the uniforms, the company dispatched the drivers, and the company dictated the rates. They ended up paying thousands in back WC premiums. But this was a company with several dozen drivers. I doubt that an association with one employee is going to get the same treatment.

Thanks everyone for your responses. I have learned alot and will take all under consideration.