When you engage someone to perform services for your company, it is important that you determine whether the individual is providing services as an employee or independent contractor. An employee is someone who is told what will be done and how it will be done. An independent contractor is someone that you do not have the right to direct the means and methods of accomplishing the result; you only have the right to direct the result of the work.

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes, fines and penalties for that worker. In the current economy, there may be the temptation to classify an individual as an independent contractor; however, the back taxes and associated fines will likely cost you more time and money over the long run.

In determining whether the individual is an employee or an independent contractor, there are three categories that should be evaluated: behavioral, financial, and type of relationship.

Behavioral

• Types and Degree of Instruction: An employee is usually given instructions regarding when and where to do the work, what tools or equipment to use, what workers to hire or to assist with the work, where to purchase supplies and services, what work a specified individual must perform and what sequence to follow when performing the work. The more detailed the instruction, the more you are exercising control over the worker, an indication that the worker is an employee.


• Evaluation System: If an evaluation system, such as a performance review, measures the details of how the work is performed, then this would point to an employee.


• Training: If you provide the worker with training on how to do the job, this is an indication that you want the job done in a particular way and is strong evidence that the worker is an employee. Periodic or on-going training about procedures and methods strengthens the evidence of an employer-employee relationship.

Financial

• Significant Investment: An independent contractor will often have a significant investment in the equipment used, even if your type of work might not require large expenditures.


• Expenses: Independent contractors are more likely to have unreimbursed expenses.


• Opportunity for Profit or Loss: Since independent contractors are more likely to have unreimbursed expenses, it’s possible for the cost of tools and equipment needed to complete your job will exceed their income. Having the possibility of incurring a loss indicates that the worker is an independent contractor.


• Services Available to the Market: Does your worker maintain a visible business location and advertise his or her services? An independent contractor is generally free to seek out business opportunities and uses a business location and advertising to obtain other business.


• Method of Payment: An employee is generally guaranteed a regular wage amount for an hourly, weekly, bi-weekly, semi-monthly, or monthly period of time. Even if a commission supplements this type of wage, this is usually an indication that your worker is an employee. An independent contractor is usually paid a flat fee for the job.

Type of Relationship

• Written Contracts: Even if your worker signs a contract stating they are an independent contractor and responsible for paying their own self employment tax, this is not sufficient in determining the worker’s status. The employee and independent contractor status is determined based on how you work with this individual.


• Employee Benefits: Employees may be offered benefits such as insurance, pension plans, paid vacation, sick days, and disability insurance. Businesses generally do not grant these benefits to independent contractors.


• Permanency of the Relationship: If your worker was hired to work indefinitely and not for a specific project or period of time, this is considered evidence that the intent was to create an employer-employee relationship.


• Services Provided as Key Activity of the Business: When someone is providing services that are a key aspect of your business, it is likely you are presenting the individual’s work as your own. When presenting someone’s work as your own, you’re more than likely involved in the control and direction of the work and is an indication of an employer-employee relationship.

If you are still unclear if your worker is an employee or independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding can be filed with the IRS. The form may be filed by you or the worker (not Resource Management, Inc). The IRS will review the facts and circumstances and officially determine the worker’s status. Be aware that it can take at least six months to get a determination. This form can only be submitted regarding actual individuals and not for hypothetical situations.

For more information regarding this subject, visit the IRS website at www.irs.gov, or contact RMI’s Payroll Director or your HR Representative.

You only have until March 31, 2010 to submit all receipts for the 2009 Flexible Spending Account Plan year. All expenses must have been incurred during 2009. You can obtain a claim form from our website at www.rminc.com. Claim forms should be faxed, mailed or e-mailed directly to National Benefit Services. Their contact information is located at the bottom of the claim form.

As a reminder from last month’s newsletter, employees can now log on to their 125(c) account on National Benefit’s website (www.nbsbenefits.com) and submit their 2009 and 2010 claims electronically. Please be sure to have a PDF copy of your IRS–approved receipt that you can attach. There is no need to submit any paper copies to NBS, as everything can be done on-line.

If you need assistance in submitting your 2009 receipts, please contact RMI’s Benefits Department at (801) 355-0200 or (888) 764-0200.

Most companies have some type of driving training, but limit the training to the basics of safe vehicle operation. Companies should also communicate their safe driving expectations, which should include safe driving concepts such as following distance, use of seat belts, obeying the speed limits, vehicle inspections and other policy issues outlined in your company fleet safety program.

Training should be provided for all new employees prior to their operating motor vehicles on company business and follow-up training should be provided to existing employees on a regular schedule. Follow-up training should include information on crash trends at your company as well as national trends.

Behaviors, more than lack of knowledge, play a significant role in crashes. Accordingly, the training should address behaviors that contribute to crashes, including:

• Speeding;
• Sudden lane changes;
• Distractions;
• Fatigue;
• Route planning;
• Scheduling; or
• Use of in-vehicle technology.

It is critical that companies do not send mixed messages. For example, saying drivers should not use phones while driving but then listing this as a duty in their job description will confuse the employee. The job description should be consistent with the company policy prohibiting use of a phone while driving.

Formal training outlines and consistent training modules should be provided for all departments and locations. Employees should get the same message regardless of where they work or to whom they report. Providing and using formal training guides will help ensure that this happens.

The company policy and expectations also should be presented to the managers and supervisors. The message needs to be that safe driving is one of the job responsibilities and not merely an additional requirement of the safety or risk management department. Managers and supervisors must set good examples and provide feedback when they observe or become aware of fleet safety policy violations.

For additional information for developing your fleet safety program or training, please contact your HR Representative.

An effective lockout/tagout program will help prevent accidents during equipment repair, maintenance, and cleaning operations. First, ensure that all energy sources are identified and de-energized to achieve maximum protection for operating, maintenance or service personnel. Once all energy sources are neutralized, the machine is in what is referred to as a “zero energy state.” The major components of lockout include:

• Shutting down equipment;
• Placing locks on energy-isolated devices; and
• Releasing stored energy.

Your written program should include, but is not limited to:

• Statement on how the procedure will be used.
• Procedures for each type of equipment.
• Steps needed to shut down, isolate, block, and secure machines or equipment.
• Procedure on how to place, remove, and transfer lockout devices.
• Specific requirements for testing machines or equipment to verify effectiveness of energy control measures.
• Steps to restore power after repair or service work is completed.
• Procedure on how to conduct and document periodic inspections.

Training must ensure that employees understand the purpose, function and restrictions of the energy control program. Specific training, as defined by OSHA, must be provided for “authorized,” “affected,” and “other” employees.

At a minimum, identify the equipment for lockout procedure, the purpose of the procedure, compliance with the program and consequences for violations. Then identify the sequence of lockout:

• Notify affected employees that the machine or equipment will be shut down and locked out.
• Identify the type and magnitude of energy sources and control methods.
• Shut down the machine or equipment by normal procedure.
• Deactivate the energy-using isolating device(s).
• Lock out the energy-isolating device(s).
• Dissipate or restrain all stored energy.

Ensure that equipment is disconnected from energy source(s), make sure that no personnel are exposed, and verify the isolation by making certain the equipment will not operate. The machine or equipment should be checked prior to being returned to service. Ensure that nonessential items around the immediate area have been removed and that the machine or equipment components are operationally intact. Employees should be clear of the area before locks are removed and the equipment is re-energized. Affected employees should then be notified that service is complete and the machine is ready for use.

Watch for short cuts!

• Don’t allow workers to rely on pulling fuses as a substitute for locking out energy sources.
• Lock out energy sources at main disconnects, not at operating controls.
• Require that lockout procedures be used with all jobs, regardless of how small or short in duration.
• Require that key-operated locks be used by each authorized person performing work on a machine.
• Enforce your lockout procedure with all employees.
• Require that outside contractors follow lockout procedures.
• Review and audit your lockout program at least annually.

For more information on lockout/tagout procedures and available training, please contact your HR Representative.