Employee or Independent Contractor?

by David McCarthy

As a rule an employer must withhold federal income tax, withhold and pay social security (FICA) and Medicare taxes, and pay unemployment tax (FUTA) on wage paid to an employee; but need not withhold or pay any federal taxes on payments to independent contractors.

The key to distinguishing an employee from an independent contractor is the degree or extent to which the employer has the right to control what will be done and how it will be done.

The price of guessing wrong can be a steep one.

One way to reduce or eliminate the risk is to ask the Internal Revenue Service for a determination. This is done by submitting IRS form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Newsletter -- October 7, 2011

http://myemail.constantcontact.com/Newsletter-from-the-Law-Offices-of-David-McCarthy.html?soid=1102904774473&aid=gDjt5p6OIUA

The Pendulum Swings

by David McCarthy

Oliver Wendell Holmes
told us that the life of the law is not logic but experience.

Many years ago, when your correspondent was a newspaper reporter, elderly residents in the suburbs north of Chicago were prey to a home remodeling scheme that would start with an offer of a free inspection of the chimney of a house. Invariably a few bricks would be kicked loose. Then the ever-so-earnest contractor would report this disturbing find to the homeowner, collect a substantial advance to make the repairs, and vanish into the hills of Tennessee. That practice and others that gave home remodelers a bad name led to enactment of the Home Repair and Remodeling Act, yet another example of the law of unintended consequences.

The statute requires contracts in writing for repairs in excess of $1,000.00 and delivery of pamphlets full of warnings to the homeowner/ customer and details about their rights. Naturally, this reversed the dynamic, and with the help of case law, unscrupulous homeowners preyed upon contractors, obtaining lavish improvements to their homes and then stiffing the contractors on the grounds that the contract was unwritten or the pamphlet had not been delivered.

The pendulum recently started to swing back to equilibrium owing to an especially outrageous example of overreaching and some common sense in the Illinois General Assembly and the Illinois Supreme Court. A married couple hired a friend to convert a three-flat into a single-family home. The contract was unwritten, and it escalated from $187,000.00 to $500,000.00 as they added ever more improvements, refinements, and upgrades. They paid the first $65,000.00 but refused to pay a penny more till all the work was done. The contractor went in hock and borrowed $150,000.00 to finish the job. Did he do the work and do it right? You bet. Apart from a quibble over a $300.00 repair of flooring the homeowners approved all the work and then stiffed the contractor for more than $300,000.00.

The contractor sued the homeowners. They obtained dismissal of all counts in the trial court on the grounds that the statute had been violated. The appellate court saved one count that allowed the contractor to sue for the reasonable value of his services. The case reached the Illinois Supreme Court, and there all three counts of the contractor's claim were upheld, not least because of an amendment to the statute. A clause that declared it "unlawful" to make more than $1,000.00 in home repairs without a written contract was replaced by a clause which allowed a homeowner damaged by a violation of the statute to sue under the consumer fraud act.

The upshot: A couple of cherry pickers who thought that $65,000.00 and a lost friendship was a small price to pay for a $500,000.00 house got their comeuppance. There is no joy in saying this: One of the homeowners was an attorney with a practice in real estate.

Red Light Camera

by David McCarthy

Picture this: You have received a ticket in the mail for running a red light at a "photo-enforced" intersection. For a change, you were actually the driver of the car and not just its owner, And you have decided to fight the ticket. So, what next?

One, you go to court on the date recited on the ticket or on the notice that follows the ticket. You will not go to trial that day. Even in the unlikely event that "the State" (or the City) is prepared to answer "ready" for trial, you will not answer "ready." The case will be continued for trial to a "date certain."

Two, on the date for trial you will approach the prosecutor and ask what he/she intends to do that day. Odds are you will be asked to stipulate to the facts. This invitation requires a non-committal response, e.g., a smile and a nod. By and by the case will be called on for trial. The prosecutor, having no undeniable proof of an agreement as to the facts, may solicit a stipulation to them in the presence and hearing of the judge.

Whereupon you will say, no, and that you want to cross examine the technician who maintains the camera. The state will move for a continuance. You will object and move for an order dismissing the case for want of prosecution. The state will move for a "nolle prosequi" and that will be the order. (The state will have the right to reinstate the charges. The chance of that happening is all but nil.)

Did you know... ILLINOIS COUNTY NAMES

Cook County-- Named for Daniel P. Cook, a pioneer lawyer, first Attorney General of the State of Illinois and Representative in Congress from 1819 until his death in 1827.

DuPage County -- The county took its name from the DuPage River, which was, in turn, named after a French fur trapper, DuPahze.

Will County -- Named for Dr. Conrad Will, a businessman involved in salt production in southern Illinois, and also a politician. Will was a member of the first Illinois Constitutional Convention and a member of the Illinois Legislature until his death in 1835.

Kane County -- Named for Elias Kent Kane, an attorney who helped draft the Illinois constitution and was the first Secretary of State. Kane was later elected to Congress and represented Illinois in the U.S. Senate until his death in 1835.

Further reading at Origin of County Names Illinois Blue Book, 2009-2010.

NAME CHANGE

By David McCarthy

The story is told of a certain Raymond Nusspickle who did not like his name. So he changed it. To Henry Nusspickle.

To do that in Illinois - change your name - it is necessary to reside in the state for six months, file a petition in the state court and publish notice in a local newspaper.

The petition must be signed, verified, and filed in the state court in the county of residence. The notice must be published three weeks in a row, and the first publication must occur at least six weeks before the petition is presented to the judge in open court.

The same petition can be used to change the name not only of the petitioner but also of the spouse and adult children of the petitioner (with their consent, of course) and minor children (if the change is in the best interest of the minors).

The disqualifying factors are what you would expect them to be, e.g., conviction for sexual abuse of a minor, for identity theft, or for any felony that is recent and unpardoned.

New Illinois Laws

One hundred ninety-four new laws go into effect in Illinois on January 1, 2011. A partial list follows:

Credit History Discrimination: Employers will no longer be able to request credit reports as part of the hiring process nor can they ask about an applicant's credit history in the interview.

Red Light Cameras: All red-light violations will now be reviewed by a police officer, a retired police officer or technician not employed by the company that runs the cameras. An image of the violation must be made available on the Internet, and any municipality or county that uses red light cameras must provide notice to the public by posting the locations of the cameras on their official web site. Finally, a safety impact study must be undertaken to assess the number of accidents at the red light camera monitored intersections.

Unpaid wages: Workers are now allowed to go straight to court to collect their wages plus any legal fees when employers don't pay.

Adoption: Adopted adults no longer need a court order to obtain their birth certificates.

Pet disclosure: Pet stores must inform potential buyers about an animal's health history and the name of the breeder as well as other details.

Commercial Vehicles: Increases the fine to no less than $500 for commercial trucks that fail to display the name of the company on the side of the vehicle.

Fake dope: Outlaws the sale of "Spice" or "K2," a material similar to synthetic marijuana.

Sexting: Teens under 18 face stiffer penalties if they are caught distributing lewd photographs using their cell phones or computers.

Car seats: The fine increases to $75 from $50, for not properly strapping a child into a car seat.

Belt-in passenger: Drivers must adjust and fasten a passenger's safety belt if the passenger is unable to do it.

Bike safety: A new law makes it illegal to "crowd" or threaten a bicyclist by unnecessarily driving a car or truck too close to a bicyclist.

Presidential primary: The date of the presidential primary election moves to the third Tuesday in March in even-numbered years.