Y'all are giving some great advice, but I feel compelled to point out to anyone new to these message boards...
A campus PTO/PTA group having paid employees is a very rare situation. Most groups aren't prepared to deal with the complexity, plus they prefer the more traditional role of underwiting supplies and programs.
Many of the folks that find their way to the Forums are already wondering"What the heck have I gotten myself into?!!" We don't want them ever more overwhelmed.
I have to agree with PTADAD to seek legal advice for your state. I have worked in Florida and Georgia with 1099MISC, 1099, W2 and other related "forms" for tracking payroll related expenditures. It is best to seek a Payroll company such as ADP for processing your payroll and quarterly state and Federal (941) forms. I do not understand why fines were assessed on the employees his particular group had as my experience has been the liability falls to the payroll company if they are filing your federal and state payroll reports though all states vary. Our companies have always employed the payroll party to file our required reports.The payroll company will usually require your tax amount up front-for the quarter-and then they will file the 941 to the IRS and send you a copy. IT is very complicated if you do not have the knowledge or the time.
There is nothing wrong with a 501C organization hiring workers. Our PTO has over 10 workers making $5,000 to 15,000. If you hire you must follow the same federal and state guidlines for hiring and payroll as any business in your state. Do not think, like we did, that because you are providng funds to a school you get a free pass on the regulations. If you are going to 1099 workers you should be very certain you know when you are allowed to 1099 a worker. We learned the hard way.
Our PTO hired and paid for several part time aides as 1099 workers. We received heavy fines from several agencys because our aides did not meet the criteria for 1099 workers. A few other PTOs in our area were also fined for doing the same thing. Fortunately we appealed and they reduced the fines after we made them all W-2 employees. We aslo added laibilty insurance to cover any worker related problem.
Based upon our experience I would say that an art assistant is a W-2 employee, not a 1099er. That means you must take out payroll tax, social security etc and you must have workers comp and disabilty insurance. Yes, it makes it comlpicated that is why we hired a payroll company to pay PTO employees. But that was not enough because the payroll company didn't know the law either, they only knew what taxes to take out. We needed a professional. One of the PTo parents has a labor lawyer on retainer so we got free advice.
You cannot just decide to 1099 any worker, as we did. There are strict federal and state guidelines. You would be surprised to know the defintion of a 1099 worker is very narrow. In fact, that defintion changes depending on the agency. The department of labor 's definition can be different than the social security and unemployment definitions. That means you must be in compliance with every agency not just one.
It is possible the defiition of 1099 worker varies from state to state. I advise you seek guidance from a labor lawyer, human resource person or your state labor agency. Perhaps a parent in your school has the proper background. If your are currently 1099ing workers I suggest you make sure you are 1099ing legally before some government agency catches up with you as they did with us.
We fund a part time position in our school. The way you handle payroll is a sensitive issue based on your State's particular guidelines. The Federal guidelines state that if you pay someone as a subcontractor (not a business name) you are required to send them an annual 1099. This relieves the PTO of any tax liability in the future. A signed contract, employment eligibility, background check, a copy of their ss card and DL should be on file.
Also, View your by-laws. Most positions that are paid require a member vote.
We based our pay rate on the current sub. rate x 30% (to cover taxes).
I would recommend that IF you decide to do thia that you write a letter to the town's School Committee gifting the set amount that covers the salary, with the express purpose that it is to be used solely for that position and if not fully used within the fiscal year reimbursed to your group.
This way if they get rid of the position, you get the money back, and also any legalities are covered by them and not you. You will need to do this every year.
This is just like what we have done with the playground (gifting it) and also an online Accelerated Reading program.
Our PTO covers the art position for the entire elementary school. We do it as a subcontractor with a signed contract at the start of the year and then she bills us monthly for her time as determined by the contract. We pay her as though she is her own company, and she takes care of the taxes, benefits, etc.
