Time To Pet is not a law firm and does not provide legal advice. It is best to consult with a lawyer regarding specific questions relating to worker classification. Worker classification can vary by government agency and from state to state. This is meant to be a guide to help pet sitters and dog walkers understand the general differences between Independent Contractors and Employees and to help direct them to more resources.

One of the most common questions we hear our customers discussing is the great Independent Contractor vs. Employee debate. Historically, many Pet Sitting or Dog Walking companies would use Independent Contractors (or ICs) as opposed to Employees. Why you ask? Well the answer is pretty simple. Using ICs is perceived to be less expensive and in certain situations — it most certainly is. Having Employees requires the Employer (you) to pay state and federal unemployment tax, social security tax and workers compensation/disability premiums. If your business uses ICs — you are not required to make these payments. Sounds great, right? Well it is — except you don’t just get to call a worker an IC. Your staff members need to meet certain requirements to classify as Independent Contractors.

So what are the requirements? This is where the debate can get tricky. There really is no one definition to what makes an Independent Contractor. The IRS has a set of common law rules to determine worker status. These rules fall into three distinct categories:

  1. Behavioral Control — Whether the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training or other means.
  2. Financial Control  — Whether the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:
  3. The extent to which the worker has unreimbursed business expenses
  4. The extent of the worker’s investment in the facilities or tools used in performing services
  5. The extent to which the worker makes his or her services available to the relevant market
  6. How the business pays the worker, and
  7. The extent to which the worker can realize a profit or incur a loss
  8. Relationship of the Parties — These cover acts that show the type of relationship the parties had. This includes:
  9. Written contracts describing the relationship the parties intended to create
  10. Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
  11. The permanency of the relationship, and
  12. The extent to which services performed by the worker are a key aspect of the regular business of the company

It’s confusing, right? So what does this all mean for a Pet Sitting or Dog Walking business. In the simplest and generalist of terms — an Independent Contractor is a entity (a business or a person) that you hire to complete a job. You don’t have any input into how the job is completed and you can’t provide materials to complete the job. The IC is not entirely dependent on you for their salary. They work for several businesses providing their service. Think of when you hire an Accountant to complete your taxes. You are not telling them how to do their job, they are doing taxes for many people and you are not letting them use your calculator.

Does this sound like how your workers operate or how you expect your workers to operate? For the vast majority of pet care companies — their staff members are not ICs. You most likely train your staff, provide them with poop bags and a leash, they depend on you for their salary and they are an integral part of your business.

However — if you wanted to know for sure, you can submit a Form SS-8 and the IRS will make a determination on the “worker status” for you.

So what happens if you decide to classify your workers as ICs when in reality that are Employees? Well first, you are subject to an audit. Depending on the findings, you can also be subject to wage reimbursement for your workers, tax payments, tax penalties and more. That’s why it is important to get this debate right the first time.

For additional resources on Independent Contractors vs. Employees, please check out the following:

IRS — Independent Contractor Defined

IRS — Topic 762 — Independent Contractor vs. Employee

IRS — Publication 1779 — Independent Contractor or Employee

IRS — Form SS-8 — Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding

IRS — Employer’s Supplemental Tax Guide 2016

SBA — Hire a Contractor or Employee

Oregon.gov — IRS 20 Factor Test — Independent Contractor or Employee?

Nolo.com — Independent Contractor or Employee: How Government Agencies Make the Call

Legalzoom — What You Need to Know About Hiring Independent Contractors

Department of Labor — Economic Reality Test

As a reminder, Time To Pet is not a law firm and does not provide legal advice. It is best to consult with a lawyer regarding specific questions relating to worker classification. Worker classification can vary by government agency and from state to state. This is meant to be a guide to help pet sitters and dog walkers understand the general differences between Independent Contractors and Employees and to help direct them to more resources.