Equine Business Resources - Employee Requirements

Horses October 29, 2015 Print Friendly and PDF

 

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
  • When considering hiring a student under a contract, make sure to discuss:
  1. Goals
  2. If food and/or lodging is included
  3. The length of the agreement and trial period
  4. Wages
  5. Hours and days offMan brushing horse
  6. 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:
  1. Contract (something to consider, not for everyone; can be a binding agreement, depends on your situation)
  2. Training and expectations
    • Think about how you will train themSource: https://en.wikipedia.org/wiki/Shire_horse#/media/File:Shire.jpg
    • Discuss what is and isn't tolerable
  3. Policies and procedures
  4. Probationary period
  5. Evaluations
    • When and how will they be done?
    • Make sure to give and get feedback from employees 
  6. 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 careSource: https://en.wikipedia.org/wiki/Horse_care#/media/File:Italian_farrier_2006_1.jpg
    • Vocational rehabilitation
    • Compensation for permanent disability
    • Death benefits
  • Volunteers are not covered

Immigration Law

Conclusion:

  • Plan ahead and have common sense
  • Use methods to protect yourself as an employer
  • Document all situations
  • Keep documents organized and easy to find 

Additional Resources:

Certified Horsemanship Association

Federal Motor Carrier Safety Administration

Internal Revenue Services: Businesses

U.S. Citizenship and Immigration Services: Working in the U.S. Resources

U.S. Department of Labor

Funded in part by the North Central Regional Center for Rural Development (NCRCRD)         

Photo By: The U.S. Army

Photo By: https://en.wikipedia.org/wiki/Shire_horse#/media/File:Shire.jpg

Photo By: https://en.wikipedia.org/wiki/Horse_care#/media/File:Italian_farrier_2006_1.jpg

 

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This work is supported by the USDA National Institute of Food and Agriculture, New Technologies for Ag Extension project.