No worries - it's actually pretty complicated. 🤯
Classifying workers as employees or independent contractors depends on some "test factors". The US Department of Labor applies what’s called the “Economic Realities Test” when determining whether a worker is an independent contractor or an employee. Under this test, the primary inquiry is whether the worker is economically dependent upon the farmer, making her an employee, or is truly in business for herself, making her an independent contractor.
Example: you pay someone to come and fix your irrigation pump. They come when they have time, set their own pay, and bring their own tools. You don’t supervise their work or tell them how to fix the pump. This person is likely an independent contractor, and if you pay them more than $600 in the year, you’ll need to issue them a W-9 and 1099 at year’s end.
Example: you hire someone to help you with harvesting your vegetables for market. You tell them to be at the farm at 6am on Friday, and that you’ll pay them $15 per hour. They use your tools to harvest the vegetables, and you train them to harvest in a certain manner. This person is likely an employee, and you are liable for minimum wage, overtime, workers’ compensation, and unemployment insurance for them.
When in doubt, it’s wise to protect yourself from owing back taxes and unemployment insurance by assuming your new hire is an employee, not an independent contractor.
You can learn more about the difference at this Farm Commons page. Let us know if you need more resources from Farm Commons! We can help you with our membership.