Strippers and caddies may have a lot in common,

[Patrick_Mucci]

It's no wonder the USA have issues if the government and their departments are worried about strippers and caddies.

Surely you must have somowhere to bomb the lights out of?

Mark,

That's really in poor taste.

And you sure didn't seem to mind calling in the Calvary when you needed help in combating an enemy.

[JESII]

Pat,

How many caddies work 30 hours/ week?

With double loops and 6 days a week, plenty.

How many of them do so for more than 4 months per year?

Doesn't matter, once you hit a 30 hour threshold, you're a full time employee

How many of them are willing to have their pay taxed fully in exchange for health insurance when they can simply buy it through the state or federal government?

You don't understand, once they're classified as employees, they won't have a choice

Pat,

You should get to know the healthcare law a little better...I believe it's the business you're in.

Regarding the ruling initially cited...yes, if an entity is not able to classify certain providers as independent contractors it will effect both parties significantly...Healthcare and it's costs will not be one of them with respect to caddies unless they misunderstand Obamacare as bad as you.

[Jeff Taylor]

Employee status will disappear in the next 30 to 50 years. Everybody will become a contractor. They will get 1099's and withhold their own taxes and have their own health care insurance.
Well, we can dream can't we?

[Jason Thurman]

Pat,

How many caddies work 30 hours/ week?

With double loops and 6 days a week, plenty.

How many of them do so for more than 4 months per year?

Doesn't matter, once you hit a 30 hour threshold, you're a full time employee

False. See below for an explanation.

Clubs with year-round caddie programs could be affected if the independent contractor status of caddies is challenged and if their caddies average over 30 hours per week year round. But for clubs with Evans Scholar programs or similar that are seasonal, they will not hit the 30 hour average per week threshold for a full 12 month lookback period, as outlined below:

Recognizing the administrative burden of monthly determinations of full-time status, and the possibility of employees moving in and out of employer (or exchange) coverage as frequently as monthly, the IRS allows employers to make the full-time determination based upon a measurement period of no less than 3 months and no more than 12 months (also known as a “look-back measurement period”), although during the “transition period” (calendar year 2014, based on time worked in 2013) the look-back measurement period is slightly different. In the transition period, employers may use a look-back measurement period that is shorter than 12 months but no less than 6 months (rather than 3 months), so long as the look-back measurement period begins no later than July 1, 2013, and ends no earlier than 90 days before the first day of the plan year beginning on or after January 1, 2014. The look-back measurement period in the transition period may begin after July 1, 2013, if the employer is using a measurement period of 12 months.

Generally, any employee who qualifies as full-time during the look-back measurement period (not including the part-time employees who make up the calculation for full-time equivalent employees) will be considered full-time for the subsequent period of the same duration (the “stability period”), regardless of how many hours that employee works in the stability period, so long as the employee remains employed in the stability period.

[JESII]

Jason,

I think caddies are more likely to fall into the seasonal employee camp if they are determined to be employees and not contractors.

130 hours of caddying in a month is a tough number to meet especially if the club decides they'll no longer walk twice in a day...

[Jason Thurman]

Agreed Jim. There are a handful of year-round clubs that could be affected, but this just isn't a big deal for the huge majority of clubs. Most don't have caddies, and most of the ones that do use a scholarship program with a limited season. My club doesn't have a single caddy that averages anywhere near 30 hours a week during the three months that we have them, and we have the second largest Evans Scholar contribution in the state of Ohio after Inverness. There will be a few clubs in major metro areas with year-round golf seasons and professional caddies that would sweat a bit if the independent contractor status of caddies is challenged, but that's a very small number of clubs overall and a lot of "if" before there's anything to worry about.

[Patrick_Mucci]

Pat,

You should get to know the healthcare law a little better...I believe it's the business you're in.

Jim,

Yeah, you're right, but, while you're at it, why don't you look at "Titile 26 of the Internal Revenue Code" which is referenced under PPACA in terms of what constitutes a full-time employee.

Let me do it for you and Jason.

Title 26: Section 4980 H; (c) (4) (A)

(c) Definition and Special Rules
(4) Full-Time Employee
(A) In General:  The term "full-time employee" means with respect to ANY month, an employee who is employed on AVERAGE at least 30 hours of service PER WEEK

Let me know if you have any further questions on what constitutes a full time employee

Regarding the ruling initially cited...yes, if an entity is not able to classify certain providers as independent contractors it will effect both parties significantly...

Healthcare and it's costs will not be one of them with respect to caddies unless they misunderstand Obamacare as bad as you.

I suggest that you and Jason stick to whatever you do during the day as you clearly don't understand PPACA.

[Pete_Pittock]

Neither group seems to have change for a c-note

[Bill_McBride]

Pat,

You should get to know the healthcare law a little better...I believe it's the business you're in.

Jim,

Yeah, you're right, but, while you're at it, why don't you look at "Titile 26 of the Internal Revenue Code" which is referenced under PPACA in terms of what constitutes a full-time employee.

Let me do it for you and Jason.

Title 26: Section 4980 H; (c) (4) (A)

(c) Definition and Special Rules
(4) Full-Time Employee
(A) In General:  The term "full-time employee" means with respect to ANY month, an employee who is employed on AVERAGE at least 30 hours of service PER WEEK

Let me know if you have any further questions on what constitutes a full time employee

Regarding the ruling initially cited...yes, if an entity is not able to classify certain providers as independent contractors it will effect both parties significantly...

Healthcare and it's costs will not be one of them with respect to caddies unless they misunderstand Obamacare as bad as you.

I suggest that you and Jason stick to whatever you do during the day as you clearly don't understand PPACA.

Pat, they can't be employed 30 hours unless they start that week in an employer-employee relationship.  I employ subcontractors all the time who work over 30 hours on one of my construction jobs.  They qualify as 1099 independent contractors because I don't tell them how to do their jobs, I don't put them in my uniforms, I am not their exclusive "employer" (client in our case).    The IRS salivates over the prospect of claiming these guys are 1099 guys.  If they can prove they are really employees, I suddenly have a serious liability for payroll taxes, not a happy prospect.  

[Jason Thurman]

Pat,

PPACA provides a means for identifying seasonal employees using the lookback period. Your information is either old or incomplete. Take a look at IRS notice 2012-58.

Seasonal employees can affect employers in two ways. First, if they work enough days and you have enough of them, they might make an otherwise small employer a "large" employer by raising them above the 50 FTE threshold. However, at clubs, this unlikely. To go over the threshold, you must employ 50+ employees on at least 120 days per year. Since most clubs in most parts of the country that use caddie programs use them seasonably, there's a low chance of them reaching 50+ employees on more than 120 days of the year.

How to determine if your seasonal employees make you large: http://www.mondaq.com/unitedstates/x/223950/Contract+of+Employment/More+on+HUDs+Proposed+Rules+On+Disparate+Impact+and+the+Fair+Housing+Act

Let's imagine that, as a club, you find out that you're a "large" employer. The next step is to figure out which employees qualify as full-time. That's where the 3-12 month lookback period comes into play (figure most clubs with seasonal caddies would use a 12 month period). A caddie would need to average 30 hours per week for the entire lookback period (12 months) to qualify as a full-time employee, which is very unlikely though not unfeasible.

If your seasonal employees make you large, here's how you determine which ones are full-time: http://www.irs.gov/pub/irs-drop/n-12-58.pdf

I know you always assume the world is trying to punk you, but I'm really not. It's a complicated piece of legislation, so I won't even try to make you look stupid for not being aware of the safe-harbor provision for temporary and seasonal employees. It's easy information to miss. But if you understand how seasonal employees are evaluated, you'll see very clearly why this isn't a big deal for most clubs even if caddies' status as independent contractors were challenged.

As for my day job, I'm a consultant who guides hospitals and clinicians transforming to shared-savings models as they prepare for the effects of PPACA. I don't do a ton of work on the employer side, but I know where to look to find information like the above since I need to at least be able to conceptually discuss it on a weekly basis.

[Matt Neff]

Seasonal employees can affect employers in two ways. First, if they work enough days and you have enough of them, they might make an otherwise small employer a "large" employer by raising them above the 50 FTE threshold. However, at clubs, this unlikely. To go over the threshold, you must employ 50+ employees on at least 120 days per year. Since most clubs in most parts of the country that use caddie programs use them seasonably, there's a low chance of them reaching 50+ employees on more than 120 days of the year.

Great post - very informative.  However, I think the chances of a club reaching the 50+ threshold even in non-year round golfing locales may be a little more likely than what seems to be the prevailing opinion in this thread when you consider the various departments many clubs have.  Along with caddies, you have to consider F&B, tennis, pool, and greens staff.  Greens staff alone at many mid to high end clubs can easily exceed 15-20 for greater than 120 days and they definitely average more than 30 hours/week for that period and at some clubs might even work enough during the season to be pushing the 30 hour average for the entire lookback period.  I'm still trying to completely understand PPACA so I may be incorrect or overlooking something so please feel free to set me straight.

[David_Elvins]

Do caddies pay their fair share of tax?  

[jeffwarne]

Do caddies pay their fair share of tax?  

I guess from a Libertarian standpoint,.....yes,...... and they're all 1 handicappers too

[Tim Martin]

Do caddies pay their fair share of tax?  

yes, and they're all 1 handicappers too

And nary a one has ever given a bad read.

[Patrick_Mucci]

Pat,

You should get to know the healthcare law a little better...I believe it's the business you're in.

Jim,

Yeah, you're right, but, while you're at it, why don't you look at "Titile 26 of the Internal Revenue Code" which is referenced under PPACA in terms of what constitutes a full-time employee.

Let me do it for you and Jason.

Title 26: Section 4980 H; (c) (4) (A)

(c) Definition and Special Rules
(4) Full-Time Employee
(A) In General:  The term "full-time employee" means with respect to ANY month, an employee who is employed on AVERAGE at least 30 hours of service PER WEEK

Let me know if you have any further questions on what constitutes a full time employee

Regarding the ruling initially cited...yes, if an entity is not able to classify certain providers as independent contractors it will effect both parties significantly...

Healthcare and it's costs will not be one of them with respect to caddies unless they misunderstand Obamacare as bad as you.

I suggest that you and Jason stick to whatever you do during the day as you clearly don't understand PPACA.

Pat, they can't be employed 30 hours unless they start that week in an employer-employee relationship.

Not true, you're confusing issues, unless you're telling me that you're rewriting and reinterpreting the IRS Code as it relates to PPACA.

When you have subcontractors, they usually bid for your jobs and are legitimately independent contractors/vendors rather than employees. 

I employ subcontractors all the time who work over 30 hours on one of my construction jobs.  
They qualify as 1099 independent contractors because I don't tell them how to do their jobs, I don't put them in my uniforms, I am not their exclusive "employer" (client in our case).

But that's not the case with caddies and strippers.

Caddies have to wear a uniform, albeit not 6 inch high heels.
Caddies must show up at regulated times.
Caddies are instructed on how to do their jobs.
Caddies are under the supervision of the club.
Caddies usually work at a given club, they don't skip from one club to the next every day   

The IRS salivates over the prospect of claiming these guys are 1099 guys.  

It's a battle the IRS has been waging for years

If they can prove they are really employees, I suddenly have a serious liability for payroll taxes, not a happy prospect.

When you have independent specialists, sub-contractors, who bid jobs, complete them and move on to other jobs, I don't think you have the same set of circumstances that the clubs have, where clubs require a uniform,, which they supply, determined hours and management control..

I think the model which some clubs may use is the "leased" employee model where the caddies work for another entity, but, it would appear, unless the case is reversed, that they won't be deemed independent contractors much longer. 

[Mike_Trenham]

This idea that very few caddies work over 30 hours is just not true, the time before the rounds waiting for a loop could easily be considered part of the work day, plus cleaning up after the round, plus rain delays.  

Some people would tell you when an assistant golf professional is on the grounds (playing, practicing, dining, giving instruction) he/she is entitled to pay and overtime.

[Patrick_Mucci]

Pat,

PPACA provides a means for identifying seasonal employees using the lookback period.
Your information is either old or incomplete.
Take a look at IRS notice 2012-58.

I've read the notice.
I had to read it several times to understand it, as I've had to do with most of PPACA.
The lookback situation is part of the "transitional" 2013-2014 implementation process.
IRS notice clearly states that it's only valid through 12-31-14.

I previously provided the definition of an employee.

The definition of a "large" employer is:

(2) Applicable Large Employer
(A) In General"The term "applicable large employer" means wither respect to the calendar year, an employer who employed an average of at least 50 full-time employees on business days during the proceeding calendar year"

(B)  Exemption for certain employers
(i)   In general An employer shall not be considered to employ more than 50 full-time employees
      if---
      (I) The employer's workforce exceeds 50 full-time employees for 120 days or fewer during the calendar year, and
      (II) The employees in excess of 50 employed during such 120 period were seasonal workers
      (ii) Definition of seasonal workers.  The term "seasonal worker" means a worker who performs labor or services on a seasonal basis as defined by
           the Secretary of Labor, including workers covered by section 500.20(s)(1) of Title 29, Code of Federal Regulations and retail workers employed
           exclusively during holiday seasons

Section 500.20(s)(1) states the following:

(s) On a seasonal or other temporary basis means:
(1) Labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year and which, from its nature, may not be continuous or carried on throughout the year. A worker who moves from one seasonal activity to another, while employed in agriculture or performing agricultural labor, is employed on a seasonal basis even though he may continue to be employed during a major portion of the year.

Hence, I think you'll see evolving regulations from the DOL, in an effort to cover more citizens, that redefine part-time and/or seasonal workers

When a club is open for the entire year, say Pinehurst for example, they'll be hard pressed not to consider caddies working at the club, full-time employees..


Seasonal employees can affect employers in two ways. First, if they work enough days and you have enough of them, they might make an otherwise small employer a "large" employer by raising them above the 50 FTE threshold. However, at clubs, this unlikely. To go over the threshold, you must employ 50+ employees on at least 120 days per year. Since most clubs in most parts of the country that use caddie programs use them seasonably, there's a low chance of them reaching 50+ employees on more than 120 days of the year.

I disagree about the low chance, especially at clubs with 36 holes or resort courses.
Pebble Beach for instance.
Some lesser clubs have well in excess of 20 employees on the maintenance crew and well in excess of 20 employees in the clubhouse and pro-shop staff.
Most clubs have far more than 10 caddies, hence, I think you'll see alot of clubs qualifying as large employers, subject to PPACA.

That situation will cause clubs to review their employment practices and shift some full-time employees to part time employees.
They'll employ part time workers who put in less than 30 hours a week (ie 25 hours a week)  
Large employers are already embarking on that strategy.

How to determine if your seasonal employees make you large: http://www.mondaq.com/unitedstates/x/223950/Contract+of+Employment/More+on+HUDs+Proposed+Rules+On+Disparate+Impact+and+the+Fair+Housing+Act

Let's imagine that, as a club, you find out that you're a "large" employer. The next step is to figure out which employees qualify as full-time. That's where the 3-12 month lookback period comes into play (figure most clubs with seasonal caddies would use a 12 month period). A caddie would need to average 30 hours per week for the entire lookback period (12 months) to qualify as a full-time employee, which is very unlikely though not unfeasible.

Remember, this is valid only through 12-31-14.
And, I think  you'll see the IRS eventually questioning clubs regarding their periods of activity.
If a club is closed for 5 months, I don't think incorporating those 5 months in the clubs test is going to go unchallenged.

If your seasonal employees make you large, here's how you determine which ones are full-time: http://www.irs.gov/pub/irs-drop/n-12-58.pdf

I know you always assume the world is trying to punk you, but I'm really not. It's a complicated piece of legislation, so I won't even try to make you look stupid for not being aware of the safe-harbor provision for temporary and seasonal employees.

I'm aware of the "Safe Harbor" provisions, but, they're only transitional
Presently, the "Safe Harbor" provisions are only applicable through 2014.

It's easy information to miss. But if you understand how seasonal employees are evaluated, you'll see very clearly why this isn't a big deal for most clubs even if caddies' status as independent contractors were challenged.

That's where we disagree.
Many clubs have a significant numbers of employees, especially those clubs with 36 holes or resort clubs.
Pebble Beach, Bandon Dunes, Streamsong, Kohler, etc., etc..
And then, think of "The Donald" and the controlled group provisions.

I think more clubs than you realize will become subject to the "large employer" classification because of caddies

As for my day job, I'm a consultant who guides hospitals and clinicians transforming to shared-savings models as they prepare for the effects of PPACA. I don't do a ton of work on the employer side, but I know where to look to find information like the above since I need to at least be able to conceptually discuss it on a weekly basis.

So do I, I've got HR 3590 sitting on my desk

[V. Kmetz]

I've got input, for sure.

REALITY: Whether the legislative/policy motive is to attack enclaves of wealth or not, AND whether THE MOST SPARTAN LAW in regards to what employee classification is made of caddies, tips, hours worked is in place, now or in the future...or not...

NO EFFECT, especially an adverse one to a club, is ever going to happen. No club is going to need to cease their caddie program because of it...another solution, another method of reporting what exists will always be available.

BECAUSE the nature of the thing is inscrutable. What taxing or governing agency is going to devise a test, and implement a test in the field, that cannot be altered in a day, once the criteria is published and notice given?  

The moment that criteria is known and quickly sized up by the professional people on the Board, Legal, or Managerial committee, what club is NOT going to alter their visible policy with regards to their caddies, while all the while maintaining their invisible structure?

I assure you, the reaction, though particular to any one individual club and their mores is going to be unanimous in that -- curiosity of curiosities! Wouldn't ya know it, Club Xs policy now has its caddie policy right at the envelope of the new law/tax/non-employee relationship. Go figure!

All the things that MIGHT be perceived as gaining legal traction make the caddie-independent contractor relationship into a employee relationship (uniforms and bibs, direction of assignments, caddie yards and sanitary facilities, pay system, OSHA, lightning policies, etc) can so very easily be retailed as something that DOESN"T violate the new edict.

And if, even if, a club was willing to honor both the letter (easy) and spirit (not as easy) of rigorous, bureaucratic system, there is no way for it to be monitored and for strident policies in May become flaccid policies by September.

On the caddies side of the ledger...  
The best of us are going to do and pretend exactly what the club fathers say to do and pretend.  We have never wanted an employee relationship with the club and we don't want our good and sustaining thing substantially altered for some as yet unrealized benefit.  To the caddie, it smells like a lot of extra trouble just to fix something that isn't broken. In this way, we are in perfect alignment with members and the clubs who would resist such alterations to the caddie-club relationship.

For many, this is the second job, the one you drift in and out of as fortune and events transpire.  When things get better in Life #1, you do less with Life #2.  At the same time, high schoolers and college kids refresh and replenish and mature and then leave in short cycles of 2 and 3 seasons....it is needed and valued for all parties, but its hardly the environment where Bolsheviks like me are looking for their rights and bennies.

So debate as much as you want about the whys, the whatfors, and the who's the victim and the perpetrator, but as long as the private club golfer wants his/her environment of caddies, they will have them, with no discernible impact on the way they have always satisified that desire.  The system is too provincial, too varied, too micro-organic, and the participants too disinterested in change to not pay it visible lip sevice with diffident field policy.

cheers

vk

[Jason Thurman]

Pat, I agree with your last post on most points.

When I say that "not many clubs are going to hit 50 employees thanks to caddies," I'm speaking in relative terms. You're obviously correct about places like Pebble, Bandon, etc. Those clubs, of course, probably hit 50 employees whether they count caddies or not. They'll certainly need to sweat if caddie status as independent contractors was successfully challenged. But I don't worry too much about them. They can afford it. Hell, Pebble may even speed up rounds and let you play in 2:30 to get a few extra tee times through to cover the cost. Win-win-win.

I also agree that the definitions of part-time and seasonal are likely to evolve, and you're probably correct to anticipate that it'll trend toward covering more people.

When/if that happens, there's a chance that it starts to affect club cultures with caddies. My real concern in this fight would be the disappearance of Evans Scholar programs, which I consider to be the lifeblood of caddie golf. That's certainly feasible if the aforementioned definition of "seasonal" changed, and if caddies were deemed to be employees instead of independent contractors. But that's two substantial changes that need to happen before the concern becomes real.

[Patrick_Mucci]

Jason,

I've never understood the almost constant attempts by State and Federal governments to deem caddies, employees versus independent contractors.   Doing so has unintended consequences, such as the one you mention, but I don't think they can see beyond the tax issues.

[Bill Shamleffer]

Jason,

I've never understood the almost constant attempts by State and Federal governments to deem caddies, employees versus independent contractors.   Doing so has unintended consequences, such as the one you mention, but I don't think they can see beyond the tax issues.

I have seen this topic come up before and have lightly looked into this matter a few times.  I have found very few instances of any government agency or authority trying to reclassify caddies from independent contractors to employees.  For what I have discovered more of these cases have resulted from the instigation of the caddie.  There is of course the well-known IRS case with Westchester CC.  From what I have found it seems like the occurrence of these cases as instigated initially by the government barely get into double figures per decade.  If I have missed many more of these cases I would accept my error on this point.

I personally prefer the current generally accepted practice of caddies as independent contractors.  However I must also acknowledge that there are also some drawbacks to the caddies being classified as independent contractors rather than as employees.  Also, all of the actions between caddies and golf clubs/resorts gets right on the borderline of the definition between employee and contractor, so I can certainly see that there will always be a debatable issue.

I do believe that for the sake of the caddies, in the long-run it is better to be classified as independent contractors.  For those who disagree with this approach, I will acknowledge that there are some good points in their favor (especially dealing with caddies injured on the job).  I also understand why some are suspect of the parties in favor of this classification (labor law can get very messy and ugly at times).  Nevertheless, I firmly believe that the economics of caddying only work with caddies as independent contractors.  And for those who argue that they should be employees, I would counter that perhaps caddying should be left to high school & college kids, and people just looking for supplemental income; but not as a career.

To get back to my original point, I think this issue has been discussed and debated out of proportion to the actual threat of the reclassification.  I am not denying the threat, but I do think other than the single IRS case against Westchester CC in the 70s, that there has been very little substantial threat to caddies being reclassified as employees at the instigation of a government agency.

[Thomas Dai]

I wonder what the legal/tax status of caddies is in the UK. Anyone know?
I believe the DHSS, or whatever they're called these days, have a made a few visits to caddyhuts over the years.
All the best

[Jim Nelson]

Couple of thoughts on this issue.

Caddies are part of the underground economy, certainly underreporting their income.  My guess is most would like it to stay that way until something happens.  Then, like others in the underground economy, they want to go above ground.  So what can happen?  Well, the obvious is injury.  Twist or break an ankle and you are down for a long time with no income.  Until now, they wouldn't have to buy insurance, so they would go to the ER and plead poverty.  Also, I have observed caddies being asked to perform non-caddy duties such as going out on the course and filling divots etc during slow periods.  Although injury doing this is not likely, anything can happen.  They have no workers comp, so again, they are out of luck, or should I say we will foot the bill somehow.  No easy answers here, but I generally support the idea of high school and college kids working seasonally, but that doesn't work so well for clubs which have year round play.  Perhaps the idea of having an agency provide caddies is the best option.

[Lou_Duran]

Employee status will disappear in the next 30 to 50 years. Everybody will become a contractor. They will get 1099's and withhold their own taxes and have their own health care insurance.
Well, we can dream can't we?

As the transaction costs of employees continue to escalate, so will the trend toward contracting.  Attempts by the government to impede the process will most likely result in less employment, by mechanization and/or small businesses giving way to large crony capitalist enterprises.  About the only way to stop the beast is to abolish employer tax withholding in favor of a 1099 system where each employee receives his gross wages and makes quarterly tax payments directly.  Coupled with a single tax rate on income with very few deductions, then, perhaps, the beneficiary classes might think twice about tax rate increases which heretofore only affected someone else.  Zero chance of this happening in my lifetime.  

[Rich Goodale]

You are wise, Obiwanduranobi, particularly when you say that your wisdom is very unlikely to become law when kleptocracy is and seems likely to continue to be the preferred mode of "government."