Do You Hire Substitute Teachers as Independent Contractors?

Substitute teachers can be engaged in a variety of ways. Some school districts hire substitutes as full or part-time employees, while others employ substitute teachers as independent contractors. Still others utilize substitutes employed by an education staffing agency. There are distinct advantages and disadvantages for each method of engagement, which are important to consider when choosing how to hire substitute teachers.

Examining the Difference Between Employees and Independent Contractors

There are significant differences involved in the manner in which substitute teachers are classified. Whether a substitute is hired as an employee or as an independent contractor, it is essential to be aware of and abide by applicable federal, state, and local employment laws. 

When substitute teachers are employed by a school district, they are subject to income tax withholding and receive an annual W-2 form that reports their earnings. In addition, the employer must withhold and pay Social Security and Medicare taxes and submit unemployment taxes on the employee’s wages. Substitute teachers hired as employees may be entitled to benefits such as sick time and retirement funding, as well as health insurance, depending on their status—part-time or full-time.    

As an independent contractor, substitute teachers may work for one or more districts. This has the potential to allow the substitute more days of employment if a single district does not provide the desired number. Acting as an independent contractor, however, places some important responsibilities on the substitute teacher. When contracted by one or more school districts, the substitute teacher is considered self-employed. 

In this case, the employing districts will report earnings on a Form 1099 and will not withhold or submit income taxes on the contractor’s behalf. The substitute will be responsible for reporting their earnings to the Internal Revenue Service (IRS) and paying the income and FICA (Social Security and Medicare) taxes owed. On the plus side, independent contractors can write off their expenses which may decrease their tax burden.

A Look at the Disadvantages of Each Classification

Though there are multiple ways that school districts can employ substitute teachers, there are some distinct disadvantages for various stakeholders. Though hiring substitutes as independent contractors may be the simplest for a district from a business management standpoint, with none of the withholding requirements, there are some associated negatives. Independent contractors are more detached and potentially less engaged than employees. The district has less control over training and management than if the substitutes were employees.

For the substitute working as an independent contractor, there is a significant burden to report earnings and remit tax payments to state, federal, and local governments. The other drawback is that contractors typically receive no benefits such as health insurance or retirement investments, and must therefore make provisions for these on their own. The result is that districts will be left with fewer options, as this is not an attractive offer for substitutes. 

Conversely, hiring substitutes as employees requires significant management from the district, including the withholding and submission of a variety of taxes. For employees like substitute teachers who move daily from classroom to classroom in a variety of district buildings, this involves the tracking of hours and work locations. The recordkeeping, payroll, and compliance tasks require the district to employ personnel to handle these administrative responsibilities.

A Third Option Has Benefits for Substitute Teachers and School Districts   

Though it may be beneficial for substitutes to be classified as employees rather than independent contractors in terms of benefits and relief from handling their own tax burden, it is more costly to the school district in terms of both dollars and administrative time. And though employing substitute teachers as independent contractors may be the easier route for a school district to take, it places significant responsibility on each and every substitute to pay their own employment taxes. For these reasons, a third option makes sense for both substitutes and school districts.

Partnering with an education staffing agency provides an alternative to the employee versus contractor decision. Selecting an agency that provides desirable employee benefits to its substitutes means that employees are afforded quality of life enhancements like health insurance and retirement savings. Since an employment agency handles the hiring and management of substitute teachers, they absolve the district of the responsibility for income and other tax collection and submission to the appropriate government entities.

Substitute staffing and management services from an education staffing agency like ESS is really the best of both worlds. ESS substitutes are employees of the agency, receiving all of the benefits, training, and support afforded employees. But the district has none of the administrative responsibilities for these employees. 

And if the district partners with the right agency, they can specify the qualifications they are seeking and how substitutes are trained to prepare them for the job. The right staffing partner can provide school districts with all the advantages of the employer/employee relationship without having to deal with the disadvantages. 

Contact ESS to hear about the alternative option to the traditional practice of employing substitute teachers in-district or hiring independent contractors. We will work with you to determine your needs, then build a team of professional substitutes who will make a difference for your school community.