Thursday, 28 March 2024
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International Volleyball

From the JVA Office: Important Update to Classification of Employees and Staff

From the JVA Office: Important Update to Classification of Employees and Staff

Club Owners and Operators have two choices when it comes to paying their coaching staff and administrative/operations staff: 1) hire them as employees or 2) classify them as Independent Contractors (IC). Each approach has its pros and cons, and each approach has its own set of guidelines. Recent government actions have added some confusion to the “Employee or Independent Contractor” decision.

According to a recent survey of junior volleyball clubs, over 80% have Independent Contractors on staff, 25% of those clubs include 30 or more indivduals. The majority of independent contractors are the coaches, however nearly 30% of clubs classify their Club Director as an Independent Contractor.

The Department of Labor (DOL) has recently issued an updated rule for classification of Independent Contractors.  The proposed rule would provide guidance on classifying workers in order to prevent and correct employee misclassification. Misclassification is a serious issue that denies workers’ rights and protections under federal labor standards, promotes wage theft, allows certain employers to gain an unfair advantage over law-abiding businesses, and hurts the economy at-large.

The final updates will most likely take effect later this spring. JVA has shared this information in the past. However, with the spike in youth sports participation, attention on youth organizations and youth clubs is at all all-time high, and the updated rules taking effect, you may no longer be able to fly under the radar.

Here’s more information to guide Club Owners/Operators on how to classify their workers:

Taxes

Employers withhold income taxes from the pay due to W2 employees and send those withholdings to the IRS and state taxing authorities. They also pay half of the federal Social Security taxes due from the worker and deduct and then send in the employee’s share. Independent Contractors receive a 1099 at the end of the year detailing their earnings for the past year. Then IC’s are responsible to make their own tax payments and will need to submit the entire 15% Social Security Tax themselves.

Benefits

Employers pay for unemployment and worker’s compensation insurance for their W2 employees. IC’s have no benefits.

The vast number of club coaches have full time jobs and coaching is often seasonal and a secondary income. Clubs can save money by paying their coaches as IC’s. However, Club Directors are required to follow the DOL classification rules. The federal law, FLSA (Fair…

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