Legal Question in Business Law in California

Re: Independent Contractor Taxes

If the IRS decides later that the contractor is really an employee, you could be liable for the employer's FICA contribution (7.5%). Go to IRS.gov and look at their list of determining factors (or Google [irs independent contractor]). Also, if the contractor is injured on the job and decides to file for workers' comp, the workers' comp court is likely to find they are an employee. The way to protect yourself is a corp-to-corp relationship where the contractor's corporation is required to show proof of liability and workers' comp insurance prior to beginning performance on the contract. Or, at a minimum, have the contractor prove they have personal health insurance so that there is less incentive for them to file a workers' comp claim in order to receive health care services.

Re: Independent Contractor Taxes

I would definitely take this issue to an employment law attorney. California is a tough state on employers, and will often find in favor of someone who is an independent contractor if they decide to make a claim that they were an employee down the road when there is a dispute.

As for the taxes, yes, you can make a condition of your contracting with them that they sign and provide you with a request for tax transcript - its a form you can download from the IRS website that allows you to request from the IRS proof of their having filed tax returns for any given period. If they are truly not employees, you can make that a condition of your agreeing to contract with them.

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