Stable Worker Awarded $274,000 In Horse Business Lawsuit
Monday, August 20, 2012
Posted by Pam Saul and Elisabeth McMillan
Of additional concern, is that these penalties do not include the unpaid payroll tax. Should the IRS take notice, the barn operator could owe back payroll taxes and penalties. In 2010 the IRS instituted the Employment Tax National Research Project. This program involved the hiring of an additional 2,000 IRS agents to identify misclassified employees and collect unpaid payroll tax. Unfortunately, the equine industry is ripe for the picking.
We understand the financial challenges of classifying your workers as employees. Last time we checked, Workers Compensation for riding instructors in California was running nearly 20% of gross pay and was closer to 50% for some equine occupations (like racetrack jockeys.) Add to that, the additional payroll expenses and the extra bookkeeping involved and reclassifying your workers may seem to be an extremely daunting undertaking.
One tool we have available for our members is Equestrian Professional's Payroll Calculator. This calculator can help you estimate what it will cost you to hire an employee or reclassify a private contractor. Many of us think only of the hourly pay and forget to calculate in the true expenses of hiring an employee. Equestrian Professional's Payroll Calculator is helpful because it enables you to examine different scenarios of hourly pay rates and hours per week with the cost of payroll added in. This can help you set wages and hours that make the best financial sense for your horse business.
Whatever your situation, this case is a wakeup call to all equine business owners. The courts, as well as the IRS, are cracking down on businesses who are classifying workers as independent contractors. Even if you have documentation to support your designation, if that worker fits within the parameters of the definition of an employee, they are an employee. If you have any doubts, seek legal counsel to keep from having this type of issue in your business.
About Equestrian Professional.com
Equestrian Professional.com is a membership site that provides horse business education, resources and support to horse professionals around the globe. The site offers a wide array of programs, tools and information to help horse trainers, riding instructors, breeders, stable operators and professional riders run profitable businesses and build successful equestrian careers. If you found this article helpful, be sure to sign up for their free newsletter.