Equine Business Resources – Employee Requirements

It doesn’t matter what the employee is called (agent, partner, independent contractor, etc.), and it doesn’t matter how payment is made to them or how many hours a week they work. But anyone who performs services for another person has now initiated an employer-employee relationship.

Employee vs. Independent Contractor

Independent contractors
- Provide their services to the public
- Control the means and methods of accomplishing the result
Employees
- The employer controls the methods and results of the services performed
- Employees are provided with the equipment needed for working and a place to work
- The employer has the right to fire them
- Payroll taxes have to be paid on employees, not on independent contractors

Hiring the Right One for the Job

Horse business employees can be subject to intensive labor, diverse hours, low wages, and high turnover rates. So what type of employees do you need, and where do you find them?

The best place to find the right employees is by word of mouth, labor pools, and listings in local publications
Post job announcements in the newspapers, on well-known websites, etc.
Provide specific job descriptions that define responsibilities and leave no room for surprises
Include job specifications
- Example: CDL (commercial driver’s license), pesticide license, CHA (Certified Horsemanship Association) certification, licensures, what is essential for the job, etc.
When considering hiring a student under a contract, make sure to discuss:

Goals
If food and/or lodging is included
The length of the agreement and trial period
Wages
Hours and days off
Method of ending the agreement, if necessary

The Interview

The goal is to find the best person for the job
Make sure to be consistent, directive, and non-directive with all the questions you ask
All questions should relate to what the person will be doing with the job
Remember to be nondiscriminatory
Always ask for references, and call the references on final candidates to help you make a final decision
Once hired, here are a few things to discuss:

Contract (something to consider, not for everyone; can be a binding agreement, depends on your situation)
Training and expectations
- Think about how you will train them
- Discuss what is and isn’t tolerable
Policies and procedures
Probationary period
Evaluations
- When and how will they be done?
- Make sure to give and get feedback from employees
Opportunities for advancement
- What options there are and how they can be achieved

Employment Taxes

These are withheld from an employee’s wages:
- Federal, state, local taxes
- Portion of Social Security and Medicare
These taxes are paid by the employer on the behalf of the employee
- Matching Social Security and Medicare

Income Taxes

Employee should fill out a W-4 form to indicate amount of withholding allowances
Amount can be determined by viewing Circular E Tax Guide
The business will make a monthly or bimonthly payments to the IRS using a Federal Tax Deposit at an authorized bank
Employees are given a W-2 form at the end of the year to help the employee file taxes
- W-2 form lists wages earned; federal, state, and local taxes withheld; and Social Security and Medicare taxes withheld
Find current forms at the Internal Revenue Service website

FICA Taxes (Imposed by the Federal Insurance Contributions Act)

Includes both Social Security and Medicare taxes
Employer must match amounts from their own funds and pay with federal taxes
Exceptions would include employees who are either under 18 who have another principal occupation or aliens who are legally in the United States to do farm work

Wages

Any payments made to an employee for their services performed that are subject to withholding taxes
- Example: Bonus, commission, salary, and non-cash compensation (receiving a horse as a bonus)
Wages do not include reimbursement or payment of travel, meals, or on-farm lodging
Independent contractor’s wages should be reported to the IRS by the employee
- Only once the wages are greater than $600 on a 1099 MISC form
- The independent contractors should request a W-9 form and EIN number from the employer

Worker’s Compensation

Worker’s compensation is an entitlement program that can prevent legal action
Uses a “No Fault Law,” where blame cannot be placed, and employee is still compensated regardless of the situation
There must be an employer/employee relationship where an accident occurs in the course of employment
- The accident could result in employee job transfer or job restrictions
- It can occur out of a single incident or be related to a repetitive motion
The purpose of worker’s compensation is to provide the employee with:
- Income maintenance
- Medical care
- Vocational rehabilitation
- Compensation for permanent disability
- Death benefits
Volunteers are not covered

Immigration Law

Employment Eligibility Verification (I-9) must be filled out and the following items provided to an employer:
- Valid driver’s license
- Social Security card
- Employment authorization cards
- U.S. passport

Conclusion: