Revision of Independent Contractor Exemption Certificates

 

On April 28, 2005 the State of Montana signed into law Senate Bill 108 – Revision of Independent Contractor Exemption Certificates. This is effective immediately.

 This law requires ALL Independent Contractors “Contract Labor” to have an Independent Contractor Exemption Certificate or Workmen’s Compensation Insurance Coverage on himself or herself dated after 4/28/2005.  They have to be working under the occupation listed on the certificate. Montana law provides for a civil penalty, to the worker, of $1,000 for each violation of work performed without obtaining workers’ compensation insurance or an Independent Contractor Exemption Certificate. Failure by the hiring agency to obtain the Independent Contractor Exemption Certificate or Certificate of Workers Compensation coverage will result in the worker being found as an employee of the hiring agency.  Hiring agents may be responsible for claims for injuries or occupational diseases and for payment of unemployment taxes, workers’ compensation premiums, wage and hour claims as well as a $1,000 civil penalty per violation. 

 It is the responsibility of the hiring agency to get and confirm the documentation of the Independent Contractor Exemption or the Workmen’s Compensation Certificate.  The worker must also be performing the type of work for which the exemption covers.  For example, they cannot be performing bookkeeping services if their exemption states computer-consulting services.

 There are exceptions for persons in their own fixed business location.  The worker who regularly and customarily performs services at their own fixed business location is not considered to need an independent contractor exemption or coverage – (for example a main street business owner – or professional services such as an attorney or CPA provides.

 When hiring someone to provide services to your company always get the following paperwork before the work starts; a W-9 form (verify a personal name matches the Social Security number), an Independent Contractor Exemption or Workmen’s Compensation Certificate, and in case of contractors, a copy of their general liability insurance.

 For more information about the independent contractor exemption law, or to obtain the application forms, please call the Independent Contractor Central Unit at (406) 444-9029, or visit their website at http://www.mtcontractor.com.

 The laws for providing 1099’s to Independent Contractors have not changed. Contact our office if you need us to file these forms for you.

 Please contact us if you have any questions.