Whether crewmembers are employees or independent contractors is a question of how they are hired and what degree of control their employer has over them. The answer not only has an effect on their tax status, but also their rights and liabilities.
An employee is entitled to forms of workers’ compensation, unemployment benefits, and certain liability or insurance protection. An independent contractor will have no withholding taken out of their pay and can expense certain items. Oftentimes workers will want to be an independent contractor right up until the time that they break something or get hurt, and then they will suddenly wish to be an employee in order to avail themselves to some protections. The difference between the two is often a measure of control.
A worker is more likely an employee if he has to follow instructions about when, where and how to work, has to be trained how to perform his job, has to render these services personally and cannot hire others to do the work. He or she is an employee when the employer has to hire, supervise and pay assistants for the worker and establishes working hours and if the job is done on employer’s premises, he is paid by the hour or week, business and traveling expenses are covered, and tools and equipment are provided.
A worker is more likely an independent contractor if the worker can hire, supervise and pay his own assistants and work when and for whomever he chooses. An independent often works at his own office, is paid by the job or receives a straight commission, can make a profit or loss and can work for others at the same time.
An area of confusion is the fact that “part-time worker” doesn’t equal “independent contractor.” You can be a part-time employee. Dayworkers or temporary hires can still be employees. A deckhand or stewardess who reports to the captain as a crewmember is generally an employee. A temporary chef, with complete control of the galley, could be an independent. The more independence you have, (such as delivery captain) the more likely you can be a contractor. Most crew positions, whether they are part time or not, are employees.
If you are hiring someone as an independent contractor, you should take steps to make sure you recognize him or her as one.
- Hire a company, not a “person.”
- Hire them for a particular job not on an hourly basis if possible.
- Require the independent contractor to furnish their tools and equipment.
- Have the contractor submit an invoice.
- Require the contractor to carry his own insurance.
- Allow the contractor to work for other businesses.
- Have a contractor agreement which spells out the relationship.
Just having an Independent Contractor Agreement does not necessarily make it so. It is a question of control. Decide what you want to be, review your status or your worker’s status and come to a determination beforehand to avoid any misunderstandings.
Michael R. Karcher is a maritime attorney with the South Florida law firm of Karcher, Canning & Karcher, which specializes in yacht and crew claims.
888 S.E. Third Ave, Suite 300 Fort Lauderdale, Florida 33316.
Phone: 954 356 6999
Email: MRK@UKandK.com