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Finance Department <br />January 6, 2008 <br />To: Board of County Commissioners <br />From: Pamela S. Dubois, Deputy County Manager <br />Subject: Independent Contractor versus County Employee Job Status <br />The status of workers as either employee or independent contractor has become an issue <br />across the state due several instances of the IRS examining local governments and <br />assessing back taxes, interest and penalties. The State Treasurers Office, the League of <br />Municipalities, and others have been offering opinions and assistance in clarifying this <br />issue. The County has several vendors in question that we have been reviewing. <br />The criteria for determining status is behavioral control, fmancial control and relationship <br />of the parties. We have consulted with the County Attorney in regards to hiring a tax <br />attorney to ensure that we have made all the appropriate reclassifications necessary to be <br />in total compliance with the IRS regulations. <br />By adding some vendors to payroll, the County needs to add a new classification of <br />employee which would be called Contracted Payroll (object code 9114 in the accounting <br />system). The accounting system will also require the establishment of a position for each <br />classification of employee for payroll processing. <br />The additional cost to the County would involve the payment of the matching Social <br />Security (6.20%), Medicare (1.45%), and Insurance and Bonds (1.75%). Funds are <br />available to cover these costs for the balance of the fiscal year with lapsed salary. The <br />individuals will also be covered under the County's worker's compensation policy which <br />could result in additional cost should a claim be filed. <br />Finance Department <br />P.O. Box 707 • Concord, North Carolina 26026-0707 • 704-920-2104 • wVVw.cabarruscounty.us <br />Tho Cella ar Nnetlun <br />-~oatx c unn <br />g <br />