Equine Farm Workers: Employees or Independent Contractors?
Whether your barn workers are considered employees or independent contractors is a complex test of facts and circumstances.
Photo: Anne M. Eberhardt/The Horse
Whether your stable workers are employees or independent contractors can have a huge impact on your equine business. As an employer, you are legally required to withhold federal, state, and local payroll taxes, and comply with all employment laws, including laws relating to wages, hours, safety, working conditions, and immigration status. If employees are injured on the job, you could have legal liability for their injuries, and many states require employers to carry workers’ compensation insurance, which can be quite costly. Further, you are legally responsible for what your employees do while they are acting within the scope of their employment. On the other hand, independent contractors are responsible for their own tax withholding and insurance, and your liability for your contractors’ actions is much more limited.
Whether your barn workers are considered employees or independent contractors is a complex test of facts and circumstances. Here, we examine the common law factors in the context of relationships between a barn and its stall cleaners. In each “A” situation, the stall cleaners are more likely to be considered employees, and in each “B” situation, the stall cleaners are more likely to be considered independent contractors. The more "A" factors a barn has, the more likely its stall cleaners will be considered employees. The more "B" factors a barn has, the more likely its stall cleaners will be considered independent contractors.
How does the barn hire its workers?
The contractual relationship between the parties can affect the determination of whether a worker is an employee or independent contractor, especially when the determination isn’t clear based upon the other factors.
A: Big Barn decides it needs help cleaning stalls, so its manager, Hapless Hannah, places a classified ad in the local paper. Larry Lieabout and Sarah Slacker answer the ad and accept Big Barn's offer of full-time employment, with health-care benefits (yes, this is fictional). Hannah gives Larry and Sarah an employment agreement to sign.
B: Sizable Stable also needs help cleaning stalls. Its manager, Fearless Frieda, has seen an advertisement on the local feed store bulletin board for Manure Eliminators (ME), a stable cleaning service. Frieda engages Manure Eliminators, and the parties sign an independent contractor agreement.
How extensively does the barn train its workers?
The more training the barn provides for its workers, the more likely they are to be considered employees.
A: On Larry's and Sarah's first day of work, Hannah introduces them to Peter Cedar, the "lead stall maintenance technician." Larry and Sarah shadow Peter for two weeks, during which time he instructs them in great detail about the desired shavings depth, amount of shavings banked against the rear stall wall, and each horse’s particular behaviors. Larry and Sarah work under Peter's close supervision until Peter is satisfied that they understand his extensive requirements.
B: Frieda is relieved to have ME on board, because she's received glowing references from other barns about the skill and professionalism of ME's employees. When the workers arrive for their first day, Frieda gives them basic instructions and turns them loose to do the work.
Does the barn provide equipment and supplies for its workers?
The more equipment and supplies the barn provides for its workers, the more likely the workers are to be employees rather than independent contractors.
A. Peter is very particular. He insists upon personally selecting the bedding, and Big Barn supplies all the manure forks, wheelbarrows, and other equipment used by Larry and Sarah to clean the stalls at Big Barn.
B. As long as the stalls are cleaned and bedded regularly and Sizable Stable's clients are happy, Frieda isn’t so fussy about how the work gets done. Manure Eliminators supplies all Sizable Stable's bedding needs, and its workers bring their own equipment.
Does the barn reimburse its workers for business expenses?
If a barn reimburses its workers for business expenses, those workers are more likely to be considered employees.
A. Big Barn's tractor is an ancient relic and is always breaking down. Fortunately, Larry is a talented mechanic. He regularly fixes Big Barn's tractor and Big Barn reimburses him for all the parts he purchases.
B. Sizable Stable has a tractor that ME uses to compact the manure pile. Part of ME's contract includes maintaining the tractor. Sizable Stable does not reimburse ME for the cost of parts required to maintain the tractor.
Do the barn's workers have any control over whether they make a profit?
The less control your workers have over whether they make a profit or loss, the more likely they are to be employees rather than independent contractors.
A: Larry and Sarah are both paid by the hour, and Big Barn limits the number of hours they can work.
B: Manure Eliminators is paid a contract price for the job, based upon the number of occupied stalls. It has control over its profits because it controls how long the job takes, how many workers it sends to do the job, and what its materials costs are.
Do the workers have set hours?
Setting hours is an exertion of control by the employer that makes it more likely the workers will be considered employees.
A: Given Peter's particularity about the stalls, he insists that all stalls must be cleaned between the hours of 6 a.m. and 8 a.m. and again between the hours of 4 p.m. and 5 p.m. every day. Between stall cleanings, he has an extensive list of other areas for the workers to clean.
B: Frieda and ME have decided that ME can clean the stalls whenever it likes, as long as each stall is clean by 3 p.m. Sometimes, ME comes in the morning, and sometimes ME comes in the afternoon.
Are the workers full time?
The less opportunity the workers must perform work for others, the more likely they are to be considered employees.
A. Although Larry and Sarah have several "free" hours each day and work a bit less than 40 hours per week, their days are so structured by Peter's strict schedule that it would be impractical for them to do work for another employer.
B. Because ME's work for Sizable Stable is limited in scope, ME is free to, and does, contract with other barns in the area.
As illustrated in the examples above, the majority of stable workers would likely be considered employees and not independent contractors. However, most stables do not treat their workers as employees and comply with all applicable laws as employers, and they are taking huge risks by doing so.
For example, if the stable is audited by the Internal Revenue Service or any other tax authority, it could be liable for years of back payroll taxes and penalties. Additionally, if a worker is injured on the job, he or she might sue the stable and/or file a claim with the appropriate federal and/or state agency, leading to legal liability for the stable. Any of these consequences would be so costly that they might easily drive a stable out of business. Therefore, barn owners should schedule a consultation with a knowledgeable local attorney to discuss their specific situations and seek guidance on how to protect themselves from potential liability.
About the Author
Rachel Kosmal McCart is the founder and principal attorney of Equine Legal Solutions, PC (ELS), an equine law firm based near Portland, Ore. McCart is a graduate of the Duke University School of Law and licensed to practice in four states: California, New York, Oregon, and Washington. She is also admitted to practice before the U.S. District Court for the District of Oregon. ELS represents clients in litigation, helps resolve equine disputes, drafts customized equine contracts, represents clients in horse industry disciplinary hearings, and incorporates equine businesses. Learn more at www.equinelegalsolutions.com.
POLL: Rabies Vaccination