Unemployment claim

Leah4

We hired a guy to do a consulting job for us. He worked for us for 2 months avg 26 hours per week, he set his own hours. We classified him as an independent contractor. He has filed for unemployment benefits with us as his last employer. We are in the State of Illinois. Does anybody know if we are liable as the last "employer"?

Thanks, and Happy New Year!

Leah

marc

Did you require the dude to carry his own workers comp and to produce evidence of a policy?

Lots of states will allow a sole practitioner to avoid carrying workers comp and to opt out of the unemployment system, which amounts to self insurance when they choose to go that way. This means he is on his own.

That said, your state may approach this issue differently and lean toward the "employee" even tho your intent was to treat this dude as a contractor.

Do you have a written agreement?

The little things that document his status as a contractor are important to a favorable outcome. I assume you paid him through accounts payable instead of payroll and that you can produce invoices showing that he billed you for his services. If you paid him through payroll and deducted taxes, you lose.

Leah4

No we did not require him to have his own policy, we did pay him through accts payable and he did invoiice us so we will work with that to begin with. I am checking with the manager on to see if we had a written agreement. Thanks for the advice!

WT

We have been down the same road in New York State and did not have to pay the claim. Our case was very similar to yours. We objected that the person was a contractor in that he did such work for others and that the project he was hired for was a finite and discreet project. He did not work by the hour and then get laid off, but rather he contracted to perform a project and was paid for that project.

This is just a guess, but I suspect some contractors may routinely file for unemployment when work gets slow. They may well be looking for a company that does not pay much attention to such claims and will let them slip through. Even if they only hit one out of ten times, that is real money.

Irie

In Ohio the employer pays into the state unemployment fund based on the employer's payroll. In my opinion (and this may not be the same in your state) if this person was not paid through your company's payroll then unemployment would not apply.

E Wart

I hope you had some type of "agreement/contract with the guy". Also, would you/are you going to send him a 1099 for his taxfiling. (If you had a contract, you should have gotten his tax ID no. and/or his ss #.) I would submit a copy of his bill. Do you know if he worked for anyone else while he was working with you? If so you need to make this known.
I would answer the UI claim as this person is an independent contractor. He has his own business. We payed him/his business to do a particular job. The hours worked and number of hours were not retained/calculated. He was/could work for other companies while he was working for us. We paid him (weekly, monthly or whatever) based on what he/his company billed us. We paid his company/or whomever under his tax ID no/ss#. He/his company was responsible for all SS, workers comp, unemployment, etc. He was paid by us through our accounts payable as any other vendor/company provider would be paid, not through our payroll as an employee.
If you have this correctly documented, you should win.
E Wart

Leah4

Thanks for the advice, we are filing a protest and will see what happens.