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Contract labor/1099s
Payroll reporting and independent contractors, subcontractors, casual labor, and spot labor

Independent contractor

Use of independent contractors is common in the construction industry and some other industries. They usually receive a 1099 instead of a W-2. Employers do not pay payroll taxes on these workers.

The fact that an employer issues a 1099 does not necessarily lead to the conclusion that BWC will consider the worker an independent contractor. BWC looks at several factors to determine if someone is an independent contractor or an employee.

For non-construction industries, we consider an independent contractor to be an employer (and therefore, not an employee) when he or she controls the means and methods of the work. Factors considered include, among others:

  • Work hours.
  • Work processes and procedures.
  • Who is furnishing the material and goods.
  • Method of payment and how paid, whether by the hour, day, job, etc.
  • If the work performed is performed outside the employer's regular business.
  • If the contractor has expenses and can incur a profit or loss.
  • Whether there is a significant investment in the business and the contractor is not merely providing labor.

Where a construction contract is at issue, the "right to control" test is not used as the basis for a determination. BWC is required to apply the 20 specific factors in ORC 4123.01(A)(1)(c). An Independent Contractor/Employee Questionnaire (UA-2) is available.

Subcontractors

A general contractor may be liable for claims filed by employees of subcontractors when the subcontractor fails to provide workers' compensation coverage for its employees.

It is a common practice to use written contracts. It's also common for the general contractors to obtain a copy of and maintain subcontractors' workers' compensation certificates of coverage, liability insurance and invoices, and/or bids for the services provided.

Ohio employers have a duty to properly report required information to BWC for proper calculation of premiums. Employers who fail to secure, maintain, or properly report required information for workers' compensation coverage may be subject to criminal prosecution.

Casual labor

We consider individuals who perform work outside a business' normal operation such as lawn care, janitorial work, etc., who do not work for another company, or hold themselves out to the public as performing these services, casual labor.

Remuneration/payments to these individuals are reportable to the governing classification.

Spot labor

We consider individuals who perform work within a business' normal operation as spot labor. For example, a plumber needs short-term help with a job. He finds someone to help and pays the helper cash. The person works within the business' normal operation.

Remuneration/payments to these individuals are reportable to the appropriate manual classification based on the work being performed.

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