There are basic guidelines that govern whether or not someone must be treated as an employee, which we outline in our “Employees, Contractors, and Volunteers” post. However, in the state of Washington, we always encourage our clients to assure, contracting a non-employee individual to do work for their business, that they verify the person is working under a valid UBI number by using the DOR.wa.gov Business Lookup. And, that if the person doesn’t have a UBI number, that they pay the person as an employee, not an independent contractor, even if all the other parameters they are working under point to their independent status.
One of our clients learned this the hard way this week. They were being randomly audited by Washington’s Department of Labor and Industries (L&I), and the auditor came upon $80 they paid to someone to mow the business’s lawn. Sadly, that child did not have a UBI number. L&I required them to go back three years, include them in payroll, and amend ALL their old payroll tax returns. They were fortunate to not be penalized.
Remember, no matter how briefly an individual works for you – unless they work for or as a LICENSED business AND meet independent contractor parameters – you need to assure you add them to payroll. The hassle and penalties are not worth it. And, it is the right thing to do. Plus, the $0.01 to $1/hour is pretty cheap insurance when you think about it, especially when you consider medical costs these days, should the unthinkable occur.