Classifying pet groomers as independent contractors has become even more difficult in the State of Tennessee. The state joins many others that no longer rely on simplistic tests or even notions when determining I.C. status.
What notions are these? Too many pet grooming business owners believe that if groomers working for them have their own business phone number, insurance, pay for their supplies and sharpening they are on their way to maintaining they have properly classified independent contractors. These are becoming false notions albeit with some background support, yet outdated. U.S. states can set entirely different qualifications from those of the federal government (Internal Revenue Service), and often do. If you employ groomers properly classified as independent contractors by federal guidelines you must also ensure they are properly classified by your state level regulator. Based on our experience the large majority of employers do not verify state compliance, and it can be costly. More U.S. states are clamping down.
An excellent example is a recent ruling by the State of Tennessee Court of Appeals. In fact they ruled on independent contractor status based on an actual case against a grooming employer and the impact on all grooming businesses in Tennessee is profound and should wake-up most employers there.
All these little notions, or details, like they have their own insurance, their own phone, they get their own supplies can become near meaningless now in the eyes of Tennessee state regulations. Similar details and several more specific to the appeals case of a grooming shop with retail in Knoxville were considered. Other factors included the groomers did participate in occasional retail sales, and the business owner provided grooming supplies. The groomers were allowed to work for others but when working for the owner did so onsite and received 50% commission.
It seems the more an I.C. determination relies on a list of factors the more the regulators are looking for a blanket regulatory definition instead of having to weigh a basket of factors based on determination “tests” by state law.
Tennessee has taken a leap not overriding all of its related employment status tests, but certainly making it simpler.
Ford & Harrison LLP summarized this important State of Tennessee ruling, “Individuals performing the main function of your business cannot be classified as independent contractors in Tennessee. At least, that’s what the Tennessee Court of Appeals ruled recently when analyzing whether the Tennessee Department of Workforce Development properly held a pet groomer liable for unpaid unemployment taxes from 2006 through 2011.”
If you own a grooming business in Tennessee and you have groomers doing grooming services, they are employees! Do you see how this ruling basically put aside small indicator tests so many grooming business owners talk about?
You can read a detailed summary of the appeals case by Ford & Harrison LLP and published at Lexology.com. Keep in mind other states have done the same or similar rulings. Have you checked your state? ▀