Are Independent Contractors Putting Your Operation at Risk? Part II
Understanding Your Legal Requirements
Historically, the IRS has used a 20-factor analysis to deter- mine worker status. Congress has also enacted what’s called Section 530 Safe Harbor based on consistency of treatment and reporting. Under the ruling, businesses are required to demonstrate that workers designated as independent contractors are consistently treated as such and that workers who perform similar functions are also treated as independent contractors and not employees. This is where aviation misses the flight. Independent contractor pilots and maintenance technicians typically perform similar functions as full-time employees. Operations hoping to find protection under the Safe Harbor ruling should consult with a labor attorney.
Workman’s Comp: The Reality
Workers’ compensation is another gray area overshadowing the independent contractor issue. If the independent pilot injures himself on assignment, guess whom he comes after? Your business. It’s a well-known fact that most independents don’t carry their own workers’ compensation insurance. It’s also a well-known fact that courts have ruled in favor of the injured independent in lawsuits. Once again, you could find yourself paying a backlog of premiums and interest to your workers’ compensation insurance company when the judge decides you should compensate the independent for his on-the-job injury.
Making an Informed Decision
It’s critically important that you understand all the ramifications with regard to staffing with independent contractors. We would be happy to help you explore all your options with a thoughtful risk-benefit analysis, so you can get your head around this complex business decision.
At Air-Sur, our knowledgeable and highly experienced team are experts at analyzing your unique situation, and helping you make informed decisions that are best for you and your business. Please contact us today and let’s get started.
Thomas K. Coughlin, AAI, is president and CEO of Air–Sur, Inc. a business risk management and insurance services corporation headquartered in Ormond Beach, FL. He has specialized in developing, implementing, and managing comprehensive risk management programs for aviation and aerospace companies since 1976.