by Grooming Business in a Box ®
In most of the United States the law does not require you to put independent contractor (IC) grooming arrangements in writing. You can meet with the IC groomer and agree on the terms of your arrangement, and thereby have an oral contract or agreement that is legally binding. However, when facing the scrutiny of an agency such as the IRS, you may find you wish you had a well-written IC contract in writing.
As consultants we have assisted grooming business owners facing serious challenges to their IC grooming arrangements. Some were asked for their written IC agreements, and none had one. Without detailed explanations supporting the validity of their IC agreements (oral) they were asked many questions. Some literally stuttered through their answers and felt “doubtful” that they met legal guidelines. When the “inquisitions” moved on to their IC groomers things sometimes got worse.
What if the answers given by the IC groomers were contradictory of those given by the owners for whom they worked? None convinced the IRS they had accurately arranged proper IC relationships with their alleged IC groomers. None.
Why You Need a Written Agreement
Oral agreements invite costly misunderstandings because there is no clear written statement of what the IC groomer and business owner has agreed to. Innocent as it may seem how do you know who remembers correctly? Even honest owners or IC groomers can remember things differently.
Why not avoid the bother with a written agreement? Otherwise it will be your word versus theirs. If you face judge and jury in a serious situation do you really know for sure you are completely compliant? Take the safe route with a written detailed IC groomer agreement.
Most important, a written independent contractor agreement helps establish a worker’s independent contractor status by showing the IRS and other agencies that both you and the worker intended to create an appropriate, legal independent contractor relationship, not an employer/employee relationship.
Remember a written agreement is not the perfect shield against IRS or other agency investigations. A written agreement is useless if you treat the IC like an employee.
Important Terms to Include in Your Written Agreement
On the next page we have provided you with essential recommendations of which all should be met. They are not necessarily complete and you should consider investing in legal software or services to write a complete agreement meeting federal, state and local regulations.
In the process you may find that your IC groomer arrangement is not compliant.
It remains our position that nearly all IC groomer arrangements today are not fully compliant with IRS guidelines, especially if your IC groomer is primarily or regularly grooming YOUR clientele. Compliant IC groomers are self-employed developing and maintaining THEIR clientele, not those of others. They may be compliant in all other ways but this one point has upheld IRS decisions that most pet groomers are employees. We have discovered legal advisors not realizing the IRS can press this point. Regardless, we encourage you to use an IC groomer agreement in writing should you hire them.
A written independent contractor agreement should contain at least the following terms:
- A description of whose clientele the IC groomer will serve (careful, this could actually void an IC relationship and make the IC legally an employee).
- A description of the grooming services the independent contractor will perform, be somewhat specific (start to finish), prep, bathing, drying, styling etc.
- A description of how much you will pay the IC for grooming services performed. It can be calculated by commission or other formulas.
- A description of who sets the grooming prices (generally it should be the I.C. actually if they are self-employed grooming their clients).
- A description of who is collecting the grooming fees (generally it should be the I.C. if they are self-employed grooming their clients).
- A description of how and when you will pay the IC when the business owner contracting the I.C. groomer collects any fees, and liabilities to reimburse the owner for any credit transaction fees involved.
- An explanation of who will be responsible for operating expenses (IC’s usually pay their own expenses). Operating expenses includes all forms of grooming supplies, towels, sharpening and repair, utilities and disposal.
- An explanation of who will provide small and large tools and equipment, and grooming workstations and bathing facilities.
- A statement that you and the worker agree to an independent contractor relationship.
- A statement that the IC has all of the permits and licenses that the state (and local government) requires to do the work as self-employed.
- A statement that the IC will pay state and federal income taxes.
- An acknowledgment by the IC that he or she is not entitled to any of the benefits you provide employees.
- A statement by the IC that he or she carries liability insurance and can provide evidence of such.
- A description of the term of the agreement (for example, six weeks, one year or until no longer required).
- A description of the circumstances under which you or the IC can terminate the agreement, and an explanation of how you and the IC will resolve any disputes.
- A description of any supervision required by the IC groomer for other workers, such as bathers that may assist them and expected reimbursements in such case.
There are generic IC contracts available in software form or digital downloads. You will have to adapt them to the grooming profession. There are those specifically for hairstylists (for people) but they typically involve renting workstations. If you are renting workstations to IC groomers (where it is legal to do so) use a rental and IC contract to help better ensure your relationship with the renter upholds an IC groomer arrangement.
No one available IC agreement is likely to be valid in all U.S. states. Be aware (most groomers are not) some regions and states have altogether disallowed IC groomers and other select professions. Consult with a professional in your area. ■
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