The Caterers Corner
Own your employees or use contract labor Caterers Corner: Own your employees or use contract labor
By fodigger on Friday, June 15, 2001 - 03:17 am: Edit

My workers-comp insurance is getting out of hand even though we've had no claims against us. In talking w/ a fellow caterer he said he treats his employees as independent contractors to which he issues 1099's at the end of the year. He increases his liability insurance for additional coverage and then doesn't need workmans comp. Any thoughts? Anybody else using this Idea? BTW this is just another fine miss the CA state legs.have gotten us into.

By Debord (Debord) on Friday, June 15, 2001 - 06:54 am: Edit

I'm assuming your talking about your waitstaff/ temp. help at the party sites not you daily kitchen staff at your base.

Unforunately that's the best way for you to do least that's what worked best when I was catering. This isn't just CA, the cost of being in business legally is expensive. Someone has to eat the costs... . One day very shortly it's going to come from the clients pocket because the small business owner and the employees have very little left to give.

By Chefmanny (Chefmanny) on Friday, June 15, 2001 - 09:20 am: Edit

Try looking for an employee leasing co. , these co's basically handle all your employee's personnel related issues and charges you a fee per employee or a % of payroll to maintain them. Vincam is a national co. which does this. It is excellent if you do not want to deal w/ payroll, payroll taxes, workman's comp. etc. The only drawback is, if you want to consider it that is that they are very picky, they wantpre-employment drug tests, driver's licenses checked if co. vehicles are used, if an employee has an accident they must submit to a drug test immidiately etc. this is how they maintain their costs down.

By fodigger on Friday, June 15, 2001 - 12:54 pm: Edit

I did use an employee leasing firm when we first got started but it was very expensive and they didn't do alot. We started doing our own about 18 months ago, but the cost just continue to go skyward but you don't have alot of choice since only a couple of companies can write policies here in CA. As for the draw backs those are things we do already. Just common sense to me anyway. Thanks for the Co. name.

By Panini (Panini) on Friday, June 15, 2001 - 02:26 pm: Edit

The only person to answer your question would be3 your accountant. I can't get away with it. I'm pretty sure you can do it with servers.
Look into other ins. carriers. NASE, etc.
All the more reason we can't compete with the suzy homemaker.

By Cheftim (Cheftim) on Friday, June 15, 2001 - 03:11 pm: Edit

There is a limit on the amount you can pay any one person as contract labor, something like $500 or $600 per year, but ask your accountant.


By Mikesul (Mikesul) on Friday, June 15, 2001 - 06:36 pm: Edit

Check into safety groups for your comp. I know that when we joined the NYS Restaurant Association, we joined their safety group and have saved over 50% each year on our comp.

Its well worth a look.


By Panini (Panini) on Friday, June 15, 2001 - 06:41 pm: Edit

I don't think there are limits on contract labor. The criteria is pretty restrictive. The laborer must provide own tools and things of that sort.
An employee can earn up to $600. before the employeer has to issue w-4 or 1099.

By Panini (Panini) on Friday, June 15, 2001 - 06:42 pm: Edit

I don't think there are limits on contract labor. The criteria is pretty restrictive. The laborer must provide own tools and things of that sort.
An employee can earn up to $600. before the employeer has to issue w's or 1099.

By Cheftim (Cheftim) on Friday, June 15, 2001 - 07:39 pm: Edit

Like I said check with your accountant.


By Peachcreek (Peachcreek) on Friday, June 15, 2001 - 09:33 pm: Edit

Where I live all labor, contract or employed are reported on my workers' comp form. The only time that the employer is exempt is if the contractor can provide proof of workers' comp coverage. We are lucky that Idaho has a non-profit State Insurance Fund which is great to work with. Our premiums have actually decreased over the past few years.
Liability insurance and workers' comp are two different things and I don't believe that liability insurance will get you off the hook. I'd be careful. The State gets nasty if you don't cover your workers comp properly.

By Sam (Sam) on Friday, June 15, 2001 - 11:21 pm: Edit

well here's what I know, you cannot call an employee, a contract laborer or independant contractor, in the catering business, the IRS has stated that fact you can pay up to $500/qtr to anyone employee w/o withholding taxes, I think...let me say that...but 1099s are supposed to be for independant contractors and the like...but employees in our field are just that employees not independant contractors...the IRS has many different "tests" to determine what is an employee & what is not, and the IRS has specifically stated that in general Caterers are by their nature employers, therefore the people who perform catering duties are employees, which makes them liable for fica/medicare contrib, fed & state unemploy & workmens comp.....sorry but these are the facts as I know & understand them, but pls check w/ your accountant & tax always there will be some in our field who do not "play by the rules" and that will only come back to "bite them in the A.."...sam sears, cec

By Debord (Debord) on Saturday, June 16, 2001 - 08:16 am: Edit

My current employeer contracts their waitstaff thru a temp. waitstaff service. That's different than hiring each person yourself and telling them their each independent labor. Which I think your talking about Sam.?

We attempted to do the later and that's a mess. Too much juggling and it probably wouldn't get a pass.

Provide the service of connecting your customer with temp. employees. Then write them as a seperate bill from your food or let the employement agency submit the bill. Then the customer is the employeer if anything is questioned.

Ulimately you don't really want to be in the employee service want to be a caterer and handle making and selling food, right?
Simplify your business as much as possible, over the years this will help you survive. If your clients are outraged over the real cost of staffing employees, let them figure out their own staff (like some people get their teenage kid freind to wait, some get local maids). Then sell them your food, let them put the rest together even if it means your just delivering qourmet food. You'll have less headaches and more profits.

Let the help meet you at the location, it's all less hassle for you. This really shows people their true costs so when they freak out over large catering bills they can see how things break down (makes a better client too).

If you want to make a profit off the labor ask for a kick-back (discount of sorts) from the temp. waitstaff company (everyone always hit us up for a slice).

By Sam (Sam) on Sunday, June 17, 2001 - 04:55 am: Edit

well you are right that if you use a temp agency you are not employers & they are not Your employees, but then you relinquish lots of control of the quantity & quality of your help...and if the help is shoddy, then your event will be remembered that after study, reveals that it's the service that can make or break you...your food can be stellar, but if the service sucks, thats what they will remember - the service,,,, if the food is mediocre and the service stellar, thats what they will remember - the service. First of all, I pride myself on exceptional food and elegant presentation, as I'm sure all the posters on this board do, but truly the service is paramount....and not to mention that we make a hefty profit on our labor/staffing charges, but you do have to do alot of paperwork & tax payments & workmens in my opinion, while it is a hassle, it pays off, and I would not want to allow my client to decide staffing questions & ratios OR choose whom will work his/her event........just my thoughts....sam sears, cec

By debord on Sunday, June 17, 2001 - 08:10 am: Edit

I can agree with your points Sam. As a conversation though I would add a response as to quality of temp.s'. There are indeed a great number of temp. services that just provide warm bodies, yes. But we do work with a couple of firms that provide top quality people, who are trained and professional temp.s' waitstaff. You can also specify to the firm which people you don't want again (if they were lazy) and on larger events they send their own top management as waitstaff to watch their product/company. Just as you would provide a manager guiding your own staff you must guide the temp.s also.

I understand also the profit that can be made from providing your staff. It sort of becomes a temp. business with-in your own catering business and can eat up a great deal of time lining up people constantly. You do have to work for your's not a free by-product!

Perhaps I was dealing on a much smaller scale catering than you. We didn't have a management system other then our-selfs/principals and after many years it seemed that we were running several businesses with-in one. These all took time away from our main focus which was food.

We were too gourmet, too hands on, too detailed. If I did it over I'd seriously consider providing more take-out and drop-off service...I'd wouldn't let my time and energy get taken away from the real thing that we loved, cooking.

By Peachcreek (Peachcreek) on Sunday, June 17, 2001 - 02:28 pm: Edit

I owned a small cafe in a seasonal resort for 6 years as a sole prop., and used leased employees exclusivly. The reason I did it was to save me the accounting nightmares. Since I operated 6 months out of the year, it worked as an on-demand accounting service. It was never any cheaper to use leased help, in fact it cost the same as employees and an additional 1.5% of gross payroll for the service.
However, it was worth it, knowing that all of my federal and state deposits were always correctly made. If you have ever missed a payment with the IRS you know how expensive it can be.
It was great. Call up every two weeks, send the guy a check, and the paychecks were fedex'ed by the next day. And all I had to concentrate on was the cafe. At the end of the year, he sent out all the paperwork, and I recieved my tax-ready end of year statement. Sweet. I did have to provide my own work comp.
Would I lease again? I would say it depends on how much energy are you spending doing books instead of cooking. If you do your own books, you might look into it. If you pay someone to do payroll already, you are merely adding another expense layer to your labor cost.
Maybe in Cal. a big leasing agency can negotiate a better price for work comp. than the little guys. Who knows. But I tend to think of having to justify the expense as opposed to raking in a savings.
P.S., in Idaho the State Insurance Fund rate on general restaurant workers is 2.33%

By fodigger on Tuesday, June 19, 2001 - 12:16 pm: Edit

I wish to thank everyone for their insight on this issue. You've brought up many interesting points.Thanks

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