From the Editor

According to the New York Times, the Federal government and more than two dozen states are seeking to reduce budget shortfalls by cracking down on employers who misclassify employees as independent contractors. Businesses that utilize the skills of independent contractors are not required to make Social Security, Medicare or unemployment tax payments. In addition, they do not withhold income taxes from these workers’ pay. According to the Times, President Obama’s 2010 budget “assumes the federal crackdown will yield $7 billion over 10 years” through stricter enforcement and tougher penalties for businesses that misclassify their workers. Don’t let it be you.

The Internal Revenue Service (IRS, irs.gov) offers the following guidelines to help business owners determine if their workers are legitimate independent contractors.

Behavioral control

Businesses have a right to direct and control how their employees perform their duties. A worker cannot be classified as an independent contractor if he is told:

• When and where to do the work
• What tools or equipment to use
• What workers to hire to assist with his work
• Where to purchase supplies and services
• What duties must be performed by a specified individual
• What order or sequence to follow when performing work

Financial control

Although both employees and independent contractors may provide some of their own tools and incur some unreimbursed expenses in the course of performing their job duties, a worker is more readily viewed as an independent contractor if he:

• has a significant investment in the tools and equipment used, and if he has significant unreimbursed expenses. Both of these factors result in a greater opportunity to lose money on a given job. The possibility of incurring a loss indicates the worker is an independent contractor.
• is free to seek out additional business opportunities. Independent contractors are free to advertise, maintain a visible business location and obtain work in their relevant markets.
• is paid a flat fee for the job. Although some professions can pay independent contractors on an hourly wage, guaranteeing a regular hourly or weekly wage amount tends to indicate an employee/employer relationship.

Length of Relationship

If a worker is brought on with the expectation that the relationship will continue indefinitely, as opposed to coming on for a specific project or time period, the worker is more likely to be viewed as an employee. Similarly, if a worker provides services that are a key aspect of the business, it is more likely that the business owner is directing or controlling that workers activities, which would also lead the IRS to conclude the worker is an employee, not an independent contractor.

For more information on drafting sound independent contractor agreements, see the March/April 2009 issue of MedEsthetics magazine (“Legal Issues,” page 10). You can access the free article through medestheticsmagazine.com, view past issues.

You can also view the full New York Times article at http://www.nytimes.com/2010/02/18/business/18workers.html.

-Inga Hansen, executive editor

For our readers in the New York City region: On Friday, February 12, 2010, at the Grand Ballroom at the Grand Hyatt Hotel, 42^nd Street, New York, more than 200 professionals from the spa and healing arts community, and the health and beauty industry of New York City metro area will be offering treatments to benefit UNICEF and the children of Haiti. This one-of-a-kind event will bolster the outstanding work that UNICEF has been doing in Haiti on behalf of children, many of whom have been injured and orphaned due to the January earthquakes and subsequent tremors. Participants in the open-to-the-public event can partake of an extensive array of special services ranging from massages, manicures, facials and makeovers to acupuncture, yoga, exercise and fitness. Also, there will be opportunities to participate in the Healing Arts For Haiti silent auction featuring spa treatments, gift items, gift certificates, and more. One hundred percent of the proceeds will benefit efforts to assist the Haitian community to rebuild. The event will take place from 12pm to 8pm.

“The Grand Hyatt Hotel has graciously donated its showplace for everyday New Yorkers to show their love on the weekend of Valentine’s Day for UNICEF and its stellar efforts in Haiti,” states Bruce Schoenberg, Co-Founder, Oasis Day Spa and Fundraising Chair, Healing Arts For Haiti. “Our efforts are all voluntary and the support has been tremendous. We are planning an event to send love and support in our own way – through healing techniques and positive energy.”  Along with The Grand Hyatt Hotel New York and Oasis Day Spa, additional supporting organizations and media partners include:  Swedish Institute, Spa Magazine, American Spa Magazine, Curiosity Works, Reed Exhibition, SpaFinder, Sheckys, Dermalogica, Savoy Professional Magazine, Matis Paris, MD Corrective Care, What’s Hot! and Day Spa Association.

For more information and to find out how you can help Healing Arts For Haiti, call 646.328.1620 or visit www.healingartsforhaiti.org; www.facebook.com/HealingArtsForHaiti or twitter.com/HealingHaiti.