Statutory Employees vs. Subcontractors Part II

In November 2009, I posted an advisory note from the IRS on how to classify employees and subcontractors. In my last post, I included how the IRS recommends differentiating employees and statutory employees. I could not find any articles by the IRS that directly compared Statutory Employees and Subcontractors.

I would think that an employer would have to first determine whether or not a worker is a subcontractor or an employee. If the worker is considered an employee, then the employer would have to determine whether or not the employer is a statutory employee.

The level of control that an employer has over a worker's activities seems to be the main determinant on the subcontractor/employee classification decision.

The one area that insurance carrier premium auditors tend to consider less over time is the certificate of insurance. We have often seen where the premium auditors will include a subcontractors pay as a company's payroll, even if there is a valid certificate of insurance. I do not agree and have debated this point with many auditors. Is it not against state insurance laws to require a company or individual be insured twice?

I do agree with insurance premium auditors concerning ghost polices. I will comment on ghost policies next time.