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Independant contractor

Does anyone in Orchid Land have experience working with an
independant contractor? As an example: Rather than a partnership,
an established jewelry business sub-leasing bench space to a bench
jeweler who works independently by keeping his own books, sales,
material orders and inventory. He would have his own business
license. Any pitfalls in such an arrangement in anyones experience?
For purposes of this exercise trust is not an issue. thanks

Gary Dirks
Janine’s Jewelry
Redding, Ca.

    Does anyone in Orchid Land have experience working with an
independant contractor?  

Dear Gary,I"ve worked in that arrangrment often and have found it to
be a good situation as long as the people thing was OK. try to cover
all bases from the git-go and keep your world as independant as

Last time I reviewed employee/independant contractor regulations it
seems you would be walking a fine line as there are 7 rules which
dictate if a person is a contractor or an employee I think using a
bench in your facility even if he is renting it would qualify him as
an employee. I would consult your accountant or review the IRS regs on
thier website.

TJ Potter

If trust is not an issue and space isn’t, then as long as you treat
them as an independent, you should have no problems. The issue comes
into place when you start treating them like an employee. If you
just rent them space and maybe time on equipment, and pay them the
going rate for any work they do for you, you should be in good shape.
When you give them work direction and manage their time, then the
line is crossed and they become an employee. You would have some
additional tax accounting to do though.


Hi Gary, I subcontract for my brothers jewelry store and it works
out much better than it did when I worked for him. It’s good for both
parties. The store owner doesn’t have workman’s comp, Tax
withholding. Medical insurance ect. Than on the other hand the sub
contractor. You go in and quote on the job. You get the work and you
do it as quickly as possible because you want to get paid. That’s the
beauty of it everyone’s happy. The trick is in the estimating. You
have to know how long it’s going to take to make the piece and how
much you think it’s going to weight.

Hi Gary,

I have used independant contractors in a former life. You can run
into lots of problems if you are not careful setting the relationship
up. Fedral wage and hour regulations take precedence over local
regulations. The Feds look at two issues primarily. First, the
contractor must be in an unambiguous profit and loss situation. They
have to have the opportunity to lose money as well as make money.
Secondly, they look at how much control you exercise over the
contractor. If you are setting work times, work policies, and so
forth, they may say you are treating them as an employee. Another
real concern is liability for worker’s compensation and anything else
the relationship might put you bind you to legally. If something bad
happens, lawyers cast wide nets and focus in on where the money is.
Best advice is to have a competent lawyer draw up the contract so you
can hold them responsible in the event something bad happens.



I had a similar situation several years ago. The man I hired worked
only part time, had his own tools, and set his own hours. Eventually,
he began working 30-50 hours/week. One day, I discovered that he was
working on other people’s jewelry, in my shop, with my materials, and
on my time. I let him go.

This man then filed for unemployment insurance! Since he was always
a subcontractor, I had never withheld any money from his checks, and
I contested his claim.

I was told that since he worked in my shop, under my supervision, he
was my employee. I had to pay back taxes for him, with penalties and
interest. I was free to reclaim some of this from him, but it would
have involved expensive litigation without any real expectation of
ever recovering the money from him.

I know of others who use subcontracted shop help, but I would not be
casual about the relationship. I would want a clear contract,
spelling everything out. I would want to see a copy of his tax ID
number, and keep it on file. And, I would want to know who his other
clients were. If I was their only client, then I am their employer.

Good luck,
Doug Zaruba

Thanks to all for imput on this subject.

Gary Dirks
Janine’s Jewelry
Redding, Ca.