Employee or Independent Contractor—An Illustrated Guide

If you hire people to do work for your horse business, one of the first and most important questions you need to answer is whether the person is legally an employee or an independent contractor. It’s an important distinction—employees must be paid in compliance with labor laws, have taxes withheld, and be covered by workers comp insurance, at a minimum. Independent contractors usually just need to be paid at the agreed rate.

Instead of restating the many guides and “rulebooks” already on the web, here are some examples of similar work done by people who fall into each category.

The Barn Worker:

Kat feeds and cleans stalls five mornings a week for the Friendly Farm boarding stable. She is required to start at 8am, and works till finished. She uses the farm’s feed cart, shovels, and forks to do the work. Friendly Farm pays her by the hour for the actual time she works. Kat is an employee.

Jose provides feeding and cleaning services for busy horse owners in an upscale community of small horse-keeping properties. He goes from house to house in the morning and evening (at his own pace), tending horses for a dozen different families. Jose brings his own wheelbarrow, forks, and shovels. He charges a flat fee per horse per month. Jose is an independent contractor.

The Tractor Guy:

Suzy has decided to hire out the mowing this year. Joe is happy to have the work. He uses Suzy’s tractor and mower, and the fuel she provides. She pays him by the hour for the time he works. When the tractor breaks, Suzy pays for the repairs. Joe is an employee.

While the tractor is in the shop, Suzy notices a flyer on the bulletin board at the feed store for Terry’s Tractor Service. Terry comes out, looks her place over, and they agree on a price for mowing the whole place. A few days later, Terry brings his tractor and mower to Suzy’s and uses them to mow her grass. He supplies his own fuel, and makes his own repairs. Terry is an independent contractor.

The Farrier:

Fred is a very popular farrier. Tired of working from dawn to dusk, seven days a week, to keep up with client demand, Fred decides it’s time for a helper.

Mel just graduated from farrier school, and is eager to get experience, so she hires on as Fred’s helper. She doesn’t yet have her own tools, so she uses Fred’s tools to pull shoes and trim feet, under his careful supervision. As she gains confidence, Fred has her start working on shoes, changing shapes and adding clips or stud holes as he directs. Per their agreement, he pays her by the day. Mel is an employee.

Cody finished farrier school a few years ago, and has built up a small clientele. She’s excited when Fred, the most popular farrier in the area, calls and asks if she’d be interested in taking over some of the easier horses at a couple large farms he serves. They agree that he’ll pay her 80% of the fees he charges the clients. She agrees to visit the barns on the same days that Fred does, so owners feel that Fred is still involved with their horses, but there’s no problem if she arrives a bit later than he does. She brings her own tools and uses them to take care of the horses that Fred has subbed out to her care. Cody is an independent contractor.

The Riding Teacher:

Anne has decided that riding lessons would be a good addition to the services at Red Barn Stables. Two of her existing boarders are interested in teaching at the farm.

Jane proposes that they offer lessons using Anne’s two retired show horses as their school mounts. Students will use Anne’s tack. Jane wants Anne to handle billing customers and collecting payments, and add lesson coverage to her current insurance. Jane will teach the actual lessons for $20 per hour. Jane will be an employee.

Jean has been teaching on a freelance basis at a couple barns in the area, but thinks it would be great to offer lessons on her own three quiet older horses that she boards at Red Barn. She already has instructor liability insurance, and her own tack for the horses. She will do her own advertising, collect payment from her students, and pay Anne $10 per rider for the use of the arena. Jean will be an independent contractor.

The above examples can help you understand a bit better what separates an employee from an independent contractor. If you have, or plan to hire, someone who is legally an employee, don’t succumb to the false “savings” of misclassifying them as an independent contractor. I’ll explain why in my next post.  Meanwhile, if you have employees, I’d love to show you the options for affordable payroll service and worker comp insurance.


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