---- P.C., Islip, N.Y..
A: If you will be hiring workers to complete specific jobs, rather than putting them on your payroll, asking them to provide their own tools (not the large machines but hand tools, work clothing, etc.) and assigning them to work independently, without constant supervision, you'll probably be fine treating them as independent contractors. The rules that govern what constitutes an employee under court definitions and IRS guidelines are complex, however, and court rulings sometimes have gone directly against the established guidelines, experts say, depending on legal circumstances. To make matters even more befuddling, different states also have their own guidelines.
The basic idea, however, is that your workers must be working independently on well-defined, finite projects rather than being put on your staff indefinitely. In your situation, where the work is seasonal, and you'll presumably be hiring people who are semiskilled and can work without direct supervision, you should be within the guidelines. If you get to the point where you're considering having someone join your company on a more full-time basis, consult a business attorney first. Making a mistake in employee classification can open you up to lawsuits, fines, penalties, and back wages and benefits.
BUYING PROTECTION. You'll need to talk to your insurance agent to get specific guidance on how much insurance you need, and what type you should purchase. In your line of work, where multiple hazards are involved, and most of the work is performed on your clients' premises, experts say workers' comp is highly recommended. In fact, some state employment statutes will define independent contractors as your company's employees if your workers do not have their own workers' comp coverage.
Liability insurance and protection against "damage to property in the care, custody, and control" of your company is also recommended, particularly if you're using independent contractors, says Rick Hagemeier of Bolton & Co. Insurance Brokers in South Pasadena, Calif. He adds: "You may also want to require that your contractors carry their own insurance -- workers' compensation if possible -- in the event they cause any significant damage or injury to others while working for you."
For more general information on insurance coverage, try industry Web sites such as www.propertyandcasualty.com and www.aon.com. Have a question about running your business? Ask our small-business experts. Send us an e-mail at firstname.lastname@example.org, or write to Smart Answers, BW Online, 6th Floor, 2 Penn Plaza, New York, NY 10121. Please include your real name and phone number in case we need more information; only your initials and city will be printed. Because of the volume of mail, we won't be able to respond to all questions personally.