Avoid Costly Mistakes with HOA and Condo Vendors in Carolina Communities

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When your community hires someone to trim trees, clean gutters, or make small repairs, it may seem straightforward to label them an independent contractor. But under the law, that label doesn’t carry much weight unless certain criteria are met—and getting it wrong can expose your association to unnecessary risk.

An independent contractor is someone who performs services for the association but operates with autonomy—setting their own hours, using their own tools, and controlling how the work is done. They are not employees of the HOA, and therefore aren’t subject to wage laws, benefits, workers’ comp, or tax withholding. However, many boards unintentionally blur this line by exercising more control than is legally appropriate.

Common Missteps: When Helpfulness Creates Risk

Over the decades, AMG has supported communities where well-meaning board members or volunteers unintentionally crossed boundaries while trying to be helpful. For example:

A board member tells a landscaper exactly how to trim shrubs, offers to lend the worker a ladder, or requests they begin work at 9:00 a.m. sharp. Another resident offers to pick up paint supplies “to save time.”

These interactions may seem harmless—but if the worker is injured or later disputes the quality of work, they may claim they were supervised as an employee rather than operating independently. This may open the association to potential tax, insurance, or legal issues—areas where the board should consult qualified professionals.

Government agencies (like the IRS and state labor departments) use multi-part tests to evaluate worker status. Key questions include:

  • Who controls the work schedule?

  • Who provides the equipment?

  • Does the individual work for others or just the HOA?

  • Was the individual supervised or left to complete the task as they saw fit?

If the answers suggest “employee,” the association could face penalties, back taxes, or claims.

AMG’s Guidance to Help Minimize Risk

To support good governance practices, AMG recommends that board members and volunteers avoid directly supervising contractors or directing their work. Instead:

  • Recommend that the board use written contracts—ideally prepared or reviewed by legal counsel—that clarify independent contractor status

  • Encourage the board to confirm that contractors provide their own tools and insurance

  • Allow professionals to complete work independently — volunteers must exercise caution with oversight, particularly impromptu instructions

With decades of experience assisting boards across communities in North and South Carolina, AMG helps implement processes that reduce risk and promote operational best practices.

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Want to know More? 

The IRS uses the “Common Law Test” to determine whether a worker is an independent contractor or an employee for federal tax purposes. This test focuses on the degree of control and independence in the working relationship and is grouped into three main categories:

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IRS Common Law Test Categories:

1. Behavioral Control

  • Does the company control or have the right to control what the worker does and how the work is done?

  • Examples: Instructions given, training provided, evaluation systems.

2. Financial Control

  • Does the company control the business aspects of the worker’s job?

  • Examples: How the worker is paid, whether expenses are reimbursed, who provides tools and supplies, whether the worker can realize a profit or loss.

3. Type of Relationship

  • Are there written contracts or employee-type benefits?

  • Is the relationship ongoing or project-based?

  • Is the work performed a key aspect of the business?

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Official IRS Reference:

  • IRS Publication 15-A: Employer’s Supplemental Tax Guide

  • https://www.irs.gov/pub/irs-pdf/p15a.pdf

  • IRS Website Resource:

Independent Contractor (Self-Employed) or Employee. Visit: https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

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Need Help Coordinating Vendor Compliance in Your Community?

Let AMG help your board organize its contractor documentation, coordinate vendor protocols, and partner with the professionals you trust.

Visit AMGworld.com to schedule a free consultation today.

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Disclaimer: Circumstances may vary. Association Management Group (AMG) recommends that boards consult their association’s legal counsel to evaluate their specific situation. Please note: by law, AMG does not provide legal advice. Boards should consult appropriate professionals when evaluating contractor classifications, agreements, or liability exposures. AMG is always happy to help coordinate with legal, or other professionals at your request.