Question:
I am new on our board and very worried about our methods. My HOA pays our “manager” as an independent contractor. She works in our office at our clubhouse and has no insurance. She is an individual resident of the community that does no other work for other business’s. Should the HOA have workers compensation and file the taxes or can we continue to keep her as an independent contractor?
– Michael
Answer:
Hi Michael,
Classifying her as an independent contractor likely does not meet IRS and state standards. Misclassification could result in serious consequences, including back taxes, penalties, and required coverage under workers’ compensation laws. Since she performs ongoing services directly related to the HOA’s operations and does so within a space controlled by the HOA, the HOA is likely required to classify her as an employee, with proper tax withholding and employer responsibilities.
Pennsylvania law requires employers to carry workers’ compensation insurance for employees. If she is injured while working and lacks coverage, the HOA could be liable for medical bills, lost wages, and fines. Additionally, since she is a resident of the community and has no independent business presence, treating her as a contractor exposes the board to further liability.
Disclaimer: We are not lawyers. The information provided on this website does not constitute legal advice.
