Why I think most homeschool teachers should be paid as employees

 

I state pretty clearly in my book Paying Workers in a Homeschool Organization (3rd edition) that teachers in a homeschool program should be treated as employees not Independent Contractors.

I’ve gotten some push back on my opinion.  I understand why. No one likes the expense and paperwork involved in employees, especially when they are  hiring part-time and seasonal employees.


But my goal is to keep homeschool organizations and their leaders out of trouble with the IRS and state governments. We don’t need a target on our backs! So I’m going to stick to my opinion because I think it’s correct and best protects homeschool leaders.


So let me explain why I have the opinion I do:

The IRS guidelines on worker classification are where I start. The IRS has the old 20-factor test and the newer 3 factor common law rules. I wrote about both of these guidelines extensively in Paying Workers.

But, I base my opinion on more than the IRS guidelines. I base it on hours of reading IRS rulings and tax court cases and my understanding of how homeschool programs operate.

I also base my opinion on this statement given by Bertrand M Harding, an attorney who specializes in nonprofit law. In his book The Tax Law of Colleges and Universities (Third Edition, Wiley, 2008) he writes,

“In at least one audit, the IRS agents asserted that, because instruction is such a basic and fundamental component of a college or university*, individuals who are hired to provide instruction should always be treated as employees because the school is so interested and involved in what they do that it will always exercise significant direction and control over their activities.” (emphasis added)

* The IRS was specifically addressing instructors at colleges and universities, but I believe their conclusion applies to public schools, private schools, and homeschool programs as well.

Some homeschool leaders differ with my opinion. I believe they are putting themselves at risk and I caution them about IRS penalties, etc. The Landry Academy IRS problems was a wake up call of how bad it can get. Although I don’t know the particular details on the financial penalties faced by Landry Academy, it was significant enough that the business declared bankruptcy.

I released a podcast on creative ways that homeschool co-ops can hire teachers without paying them as employees. Creative Ways to Run Your Co-op Without Employees

I hope that helps,

Carol Topp, CPA
HomeschoolCPA.com

Comments

  1. Angela says:

    What if we are not a co-op, but rather a homeschool group that facilitates classes? We provide space and the infrastructure for moms and dads to teach what they do best to other children, including their own. How does that jive with the idea of a school? We wrote our 501c3 specifically so that we wouldn’t be called a school. Our insurance lists us as a club organization. I would hate to make everyone that teaches through our group employees and have to raise our prices so much that it would be financially impossible for families to be part of the group or take classes.

  2. Carol Topp says:

    From what you described your organization is an educational organization offering classes. It’s similar to a school, just not a full-service school. I know you don’t like the idea of having to treat everyone as an employee and the increased taxes and paperwork. None of us like taxes or paperwork, but it’s the law of our land and it may be what is fair to the teachers. Right now your teachers are bearing the brunt of the payroll taxes themselves.

    Paying employers taxes for part-time seasonal employees with no benefits may not be all that expensive. It shouldn’t be financially impossible for families to afford if you get creative about other ways to raise money or use more volunteers. Lots of homeschool parents are happy to pay extra for excellent, quality teachers.

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