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As your equine business grows, you could quickly find yourself needing some extra help to keep up with day-to-day operations. Below you will find helpful tips you can use when hiring for your horse farm.
Hiring for your horse farm legally is critical for your equine business, both from a tax and legal standpoint. Hiring for your horse farm impacts your federal, state, and local payroll taxes. Legally, you must comply with local and federal employment laws.
But, good news! This post breaks down everything you need to know about hiring legally for your horse farm.
Table of Contents:
There are essentially three different ways to hire: employees, independent contractors, or interns. Let’s break down all three:
Equine businesses, such as boarding and training facilities, often require someone to help with everything from turnouts to feeding times. It’s especially important that equine business owners know if they’re hiring an independent contractor or an employee. This is because most horse farms require hires to perform their work at a specific location and time.
Hiring an employee or an independent contractor will have different impacts on your equine business. So, it’s important to know the difference between the two!
If you have an employee, you’re required to withhold federal, state, and local payroll taxes. Plus, you’ll also have to comply with employment laws (think wage laws, safety, hours, immigration status, and working conditions.) For example, under employment laws, you’d be responsible for what your employees do while they are on the job.
If an employee is injured on the job, you may be legally liable for their injuries. This is also why several states require the employer to carry workers’ compensation insurance. On the other hand, as an equine business owner, your liability for hired contractors is much more limited. Plus, contractors are responsible for their own taxes and insurance.
With these requirements in mind, let’s compare the two classifications and discuss why you might choose one over the other.
Determining whether or not a hire is an employee or a contractor is a complex test based on multiple factors. You can find a complete look at what factors the IRS considers here, but below we discuss the main questions you need to ask yourself.
As you can see, the factors between a contractor and an employee can be a little tricky to decipher. But, it is important to correctly classify your hires.
The surest way to know how to classify your hires is to use either an independent contractor agreement or an employment agreement. (Whichever is appropriate for your situation.) This defines the employment relationship in black-and-white writing.
But what can go wrong if an equestrian business misclassifies their hire? For starters, if the IRS audits the barn, it could be liable for years of back payroll taxes and penalties. You’ll also have to think about what happens if your hire injures themself on the job. If they are an employee, they may be able to file a claim with your state’s agency. This could lead to massive legal liability for your horse farm and is obviously something you’d want to avoid.
Yes, technically any business can hire an intern!
But, don’t think you can get cheap work by just hiring interns instead of contractors or employees. There are strict laws when it comes to hiring interns.
Yes, you can hire unpaid interns. But, I wouldn’t recommend it unless you’re hiring them through a school (such as an externship program.)
If your equine business is “for-profit” (i.e., if you make any money with your business), you have to pay your interns at least minimum wage. You also have to provide overtime pay under the Fair Labor Standards Act (FLSA). Again, if you’re hiring them as an extern (where the student gets class credit in exchange for working for you), this won’t apply.
But, if you’re hiring an intern, the law requires you to pay them unless you can pass this test:
Courts have used the following 7 factor “primary beneficiary test” to determine whether an intern or student is, in fact, an employee under the FLSA:
No single factor is determinative, which means that the courts examine every case independently. If the analysis confirms that the intern or student is not an employee, then he or she is not entitled to either minimum wage or overtime pay under the FLSA.
First, it’s important to note that every state has different state laws. So, if you have any questions about what’s best for your equestrian business, it’s best to reach out to an attorney in your state.
Because horse farms and equestrian businesses typically require hires to perform their tasks in person, at set times, using the horse farm’s equipment, etc., their hires are most likely to be employees, rather than contractors.
So, when hiring an employee for your equestrian business, here’s a quick list of what you need to know:
If you’re looking to hire an employee, visit the Small Business Administration at www.sba.gov/content/hire-your-first-employee for additional information.
Hiring any type of worker for your equestrian business is an extremely important decision, and knowing what type of hire you want to make is perhaps the most important decision. Again, the best step you can take to protect your business when hiring is to define the business relationship in writing.
Never hesitate to reach out to an attorney in your state to discuss your specific situation and seek guidance on how to protect your own equine business from potential liability.
Looking for tips on how to hire for an online position? Check out this post.
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