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View Full Version : I'm being audited by Labor and Industries


kvrdave
12-31-07, 06:58 PM
:banana: What a great way to start the new year. They want every file I have for the past year.

What a pain in the butt. I'm trying to think of how I might have screwed up, but can't come up with anything. I'm allowed to keep a time card for all agents if they work under 40 hours a week, or I must report them as 40 hours a week. Being that records are suck to keep, I always show them as 40 hours a week. So I think I am safe there.

But my accountant told me some stupid news. If I pay someone who is not licensed by the state, L&I can consider them to be an employee and make me pay L&I on them. So if I paid some kid to mow a lawn or shovel snow, I could get hit. And then penalties, interest, etc. And to top it off? A city license doesn't mean squat. So if someone washed my windows and had a city license, but did not have a state license, I am still screwed.

:mad:

Freaking government crap. You do everything you can to follow the rules while still trying to run a business, and you can just count on the fact that you will miss some stupid minutia and get it up the pooper.

I need to go prepare my pooper.

parrotheads4
12-31-07, 07:05 PM
Good luck. Bottom line...if they want to find something they will. Buy coffee, donuts, etc. for them, and be nice.

crazyronin
12-31-07, 07:07 PM
Wouldn't someone essentially contracted for a specific job and not paid an hourly wage be considered an independent sub-contractor?

kvrdave
12-31-07, 07:08 PM
Wouldn't someone essentially contracted for a specific job and not paid an hourly wage be considered an independent sub-contractor?

Apparently not according to the state. I don't get that either. But maybe this is just a random thing. It is just a mail audit, so I send them stuff and they look it over from their office. They don't visit.

crazyronin
12-31-07, 07:14 PM
Apparently not according to the state.
Then the state is an ASS!:grunt:



I'm out of order?! You're out of order! The whole damn world is out of order!

parrotheads4
12-31-07, 07:25 PM
Why start a business anymore? It's crap like this that's killing the U.S. We better start adding days to the week, and hours to the day if we expect anyone to have the time to own a business. You now need at least one lawyer, and one accountant before you even get started.

RandyC
12-31-07, 07:27 PM
Wouldn't someone essentially contracted for a specific job and not paid an hourly wage be considered an independent sub-contractor?
The laws for determining employee vs contractor are quite clear (not that there is not a lot of gray area) and are designed to protect employees from exploitation.

There are guidelines an employer is supposed to use. I have both employees and independent contractors working for me, but you have to be very careful here.

Does the worker determine their working hours or do you?
Do they supply their own equipment, or do you?
Does the worker make decisions or do you direct them?
Does the worker control where they work, or do you?

Note, it is not an issue of failing one question, but more of a general set of questions.

In other words, if you hired a gardening service, and he says he can come by on Wednesday morning, and he arrives with his own tools and you give him general goals but he determines how he gardens.... that is an independent contractor. On the other hand, if you bring someone on to garden, you tell him which houses to garden at and when, and you supply the tools to do, that is an employee.

If you feel pretty good about the rules and how you handled them, then there is nothing to worry about. I have been accused of having an employee that was misclassed as an independent and I won.

RandyC
12-31-07, 07:31 PM
What a pain in the butt. I'm trying to think of how I might have screwed up, but can't come up with anything. I'm allowed to keep a time card for all agents if they work under 40 hours a week, or I must report them as 40 hours a week. Being that records are suck to keep, I always show them as 40 hours a week. So I think I am safe there.

THIS can be a real problem. Note, Washington may be different from California. But this is something I would have not done. You need to keep real time card that reflect actual hours or you can be faced with penalties. What if they claim they worked 50 hours?

ernestrp
12-31-07, 07:37 PM
Bend Over.

http://i10.photobucket.com/albums/a142/Bronkster/1629.gif

Duran
12-31-07, 08:02 PM
The laws for determining employee vs contractor are quite clear (not that there is not a lot of gray area) and are designed to protect employees from exploitation.


Whew! I was worried that we'd expect people to take responsibility for not letting themselves be exploited in voluntary contractual arrangements!

RandyC
12-31-07, 08:41 PM
Whew! I was worried that we'd expect people to take responsibility for not letting themselves be exploited in voluntary contractual arrangements!


I get the point, but it really is not that simple. Using the idea that all contracts are voluntary, we could get rid of all HR rules, minimum wage, etc. I can see in a Ayn Randish way the positives of such a thing, but I can also see the need to protect the employee (and I am speaking as an employer). I guess it comes down to if one believes in a Libertarian government perspective or not.

That is also one reason there is a determination of exempt status as an employee. You can treat employees on two different levels, exempt where some of the rules don't apply...or are different... and non-exempt.

Joe Molotov
12-31-07, 10:24 PM
Pay them off.

DVD Polizei
12-31-07, 10:29 PM
kvrdave,

Have you been notified of any worker's comp claims in the last few years? Or would you be notified? Just wondering. Maybe it was a claim (or two) which set the wheels in motion.

L&I can consider them to be an employee and make me pay L&I on them. So if I paid some kid to mow a lawn or shovel snow, I could get hit. And then penalties, interest, etc.

Do you keep records of children shoveling snow.

A city license doesn't mean squat. So if someone washed my windows and had a city license, but did not have a state license, I am still screwed.

If somebody washes your windows, you're required to see their business license but you're also required to see their "state license". What's that. Isn't this a business license to do business issued by the state?

---

Personally, I think somebody said they did some work for you and now they're making a WC claim. So, maybe start there and look at your records for notifications of a comp claim--assuming you would be notified because I have no idea how it specifically works if you are required to be notified or not.

If you're NOT required to be notified, then (after asking your attorney if this is a wise move), request documents for those filed claims which mentioned you as a reference. This would at least narrow the issue down where you could get the proper documentation without any surprises.

Bill Geiger
12-31-07, 10:33 PM
You should have just sold shit on eBay!

Good luck Dave. We will visit ya in Sing Sing!

Shazam
01-01-08, 12:57 AM
See, if you hired illegal immigrants, you wouldn't have had to deal with any of this.

kvrdave
01-01-08, 05:37 PM
THIS can be a real problem. Note, Washington may be different from California. But this is something I would have not done. You need to keep real time card that reflect actual hours or you can be faced with penalties. What if they claim they worked 50 hours?

I'm going from meory from a long time ago, but I thi8nk this is a special rule for Real Estate agents.

I haven't ever had a claim filed against me. I would be informed, and the state always shows my "fisk" factor, which is perfect.

Anyone we hire for crap work gives us invoices, provides their own stuff, and makes their own hours.

It may just be a random audit. The fact that it is a mail in audit would support that. Still a pain.

Ranger
01-01-08, 05:51 PM
But my accountant told me some stupid news. If I pay someone who is not licensed by the state, L&I can consider them to be an employee and make me pay L&I on them. So if I paid some kid to mow a lawn or shovel snow, I could get hit. And then penalties, interest, etc. And to top it off? A city license doesn't mean squat. So if someone washed my windows and had a city license, but did not have a state license, I am still screwed.
A city license? I thought this was about state-licensed real estate agents? Are you having unlicensed agents make land deals?

If so, then wouldn't the issue be with the state real estate commission?

Oh, and happy new year. :)

matta
01-01-08, 06:01 PM
A city license? I thought this was about state-licensed real estate agents? Are you having unlicensed agents make land deals?

If so, then wouldn't the issue be with the state real estate commission?

Oh, and happy new year. :)

I think he means city licensed lawn mowers and window cleaners, not agents.

Duran
01-01-08, 06:33 PM
I get the point, but it really is not that simple. Using the idea that all contracts are voluntary, we could get rid of all HR rules, minimum wage, etc. I can see in a Ayn Randish way the positives of such a thing, but I can also see the need to protect the employee (and I am speaking as an employer). I guess it comes down to if one believes in a Libertarian government perspective or not.

:wave:

I just think the regulations and overhead associated with "protecting" adult workers from themselves is expensive, wasteful, and counterproductive. It hurts businesses, and it hurts employees that are willing to take jobs for less money.

kvrdave
01-01-08, 09:59 PM
A city license? I thought this was about state-licensed real estate agents? Are you having unlicensed agents make land deals?

If so, then wouldn't the issue be with the state real estate commission?

Oh, and happy new year. :)

On the real estate side I am more than covered, but the business still hires people in property management to mow lawns, clean homes, etc. I looked over the ones we used and we are mostly covered. The others may be grey. I think a good case can be made, but the state may differ. That is if they ever are looking for all that crap.

Ranger
01-01-08, 10:52 PM
Well, if you are covered in the real estate end, then it shouldn't be too bad. The cleaning stuff seems like small potatoes, but sometimes, the auditors just don't have anything better to do. It's just the past year, could have been the past 3-5 years.

kvrdave
01-01-08, 11:19 PM
It could always become that. :lol:

I also get audited every three years by the dept. of licensing. Never had a finding. I have found that they are generally more concerned with getting you into complience so long as you are trying.

But I did see a local broker get hit hard. He had never filed B&O or L&I. I think it was because he honestly didn't know about it. But he opened up a trust account, which automatically triggers the state to look into you on occasion and hit him with 5 years of back taxes, penalties, etc. Ran him around $10k for a 1 man operation. I don't expect anything like that.

Charlie Goose
01-02-08, 08:54 AM
It must not be nice.

achau9598
01-02-08, 09:01 AM
what kind of cake do you like? you know, for the file I'm going to send you.

kvrdave
01-02-08, 04:55 PM
:lol:

I've been emailing back and forth with the audit guy just to get clarification on things. They ask for a list of all business and services you pay and what service they provide. That may not sound like a big deal until you really start to think about it. Do they want me to list US Cellular for providing me cell service? What about the state department of revenue? I spend a fair amount at Home Depot, but don't send them a 1099, do they want them included?

Well, the answer is no. So how do I know what they want and what they don't? They even admit that there is a lot of grey area in this whole deal and that the legal definition of employee, etc. if pretty tricky. So I sent them everything I could and now they get to sift through a years worth of everything. I am sure they can find something if they really want to, but hopefully this is more about educating the businesses, which is their claim.