Temp Employee wants to claim Exempt on his W-4 in California
Sheila2008
44 Posts
He originally wanted us to 1099 him, but he doesn't have Workers' Comp Insurance, so we hired him as a temp employee. He now wants to claim exempt on his W-4. He is getting $21 an hour and works with us at least 3 days or more a week. Can he do that and are there any repercussions to the employer for that?
Comments
Your responsibility as an employer is to get a valid W-4. That means making sure it is signed, etc. Claiming EXEMPT is a valid choice. You do not know what other exemptions he has on his personal taxes. You can not be held responsible for his underwithholding if he choses exempt. You CAN be held responsible if you do not have a valid form, fail to follow the choices on the form OR if the IRS sends you a letter and tells you to change his choice, but generally it takes years for that to happen.
Honestly, I would be more worried about who this person is hiding from ...most of the time they want to hide from the IRS/child support when they want to be 1099'd and/or claim EXEMPT.
Also to be valid, he needs to fill out a NEW w-4 each year by February or it changes to Single 0.
ETA: I am speaking here of federal withholding. With CA withholding, this might be different...but what I am finding doesn't lead me to believe it would be different.
If he claims exempt the only problem he could have is that when it comes time for him to pay taxes, he could owe the IRS some money.
Your responsibility is to get a complete and signed W4 form. The amount of deductions or lack there of is not your responsibility, and the repercussions of those decisions falls on the employee.
As others have said, I wouldn't worry about the W-4. What I would worry about is why you would want or not want him to be an independent contractor. The "employee" doesn't get to choose. IRS defines the issue. Whether he has actual work comp insurance or not doesn't matter. If he's an independent contractor then he assumes the liability himself and can "self-insure". There are more definitions at the IRS website on how to define if someone can be an independent contractor or if they are actually employees.
One of the primary tests to determine if someone is an IC or not is whether the "employer" can direct the work or just define the results. For example, if you hire an electrician, do you pay him to perform specific work as directed, or do you pay him a fee to complete a job to your specifications, but you don't direct his work? Does he use his own tools or your equipment? Will she get paid the same amount whether it takes her 100 hours or 1000 hours?