West Virginia: Clarifies Independent Contractor Status
All Employers with WV Employees
June 9, 2021
Contact HR On-Call
SB 272 provides the definition of independent contractor for purposes of workers’ compensation, unemployment compensation benefits, Human Rights Act rights, and wage payment and collection laws. There must be a written agreement between the business and individual stating their intent to have an independent contractor relationship. The individual must also acknowledge in the writing that (1) they are providing services as an independent contractor; (2) they will not be treated as an employee; (3) they will not be provided with either workers’ compensation or unemployment benefits; (4) they are required to pay all applicable federal and state income taxes and that no tax withholdings from payments will be made by the business; and (5) they are responsible for the majority of the supplies and expenses incurred in connection with the contracted services unless the expenses are for non-local travel, the expenses are reimbursed under an express provision of the contract, or they are commonly reimbursed under industry practice.
In order to be considered an independent contractor, the individual must satisfy additional requirements. The person must file tax returns with the fees earned as being from a business or for self-employment, or provide their services through a business entity, such as a partnership, company or corporation, or registered sole proprietorship. Subject to limited exception, the individual actually and directly controls the manner and means by which the work is to be accomplished, even though they may not have control over the final result of the work.
Finally, the individual must meet three or more of the following criteria:
- Except for an agreement relating to final completion or final delivery time or schedule, range of work hours, or time of presentation, the person has control over the amount of time personally spent providing services.
- The person has control over where services are performed, unless they can only be performed at specific locations.
- The person is not required to work exclusively with one business unless: a law prohibits them from providing services to more than one business; a license or permit limits the person to performing work for one business at a time or requires identification of the business; the person is free to exercise independent initiative in soliciting others to purchase his or her services; the person is free to hire others to help with the work; the person cannot be required to perform additional services without a new or modified contract; the person obtains permission to use the business’s workspace to perform the work; the IRS in a business audit did not classify the individual as an employee; or the person is responsible for the costs of any required business licenses, insurance, certifications, or permits required to perform the services.
In the alternative, the individual could just meet the IRS definition of a direct seller. If the person does not meet any of these criteria, they must otherwise meet the IRS’s independent contractor test. Notably, the new rules do not apply to on-demand drivers.
- Review SB 272 here.
- Have independent contractor relationships reviewed by legal counsel.
- Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser.
© 2021 ManagEase