I'm curious - is anyone else seeing a lot of 1099 abuse these days?

Originally posted by Phage
reply to post by hadriana

 

If you are working in someone's shop or factory there is no way you can be legally considered an independent contractor.

edit on 2/4/2012 by Phage because: (no reason given)

Well, you could for some jobs. For example, if you maintain the machines - determine your own schedule, use your own tools - you could be an independent contractor.

If you're required to be on the factory floor from 7am-3pm, can't leave, use the factory's tools then you're an employee.

reply to post by Phage


Well that's what I think TOO!
I mean like, you are going to tell someone you have to be here at 8 am and put together these widgets until 6pm with a 30 minute lunch break - you should be a darn employee. NOT someone making MINIMUM wage or just a bit better on a 1099.

reply to post by Mountainmeg


Gosh I wish I'd know about stuff like that years ago. I appreciate you posting it for anyone else that might be in that situation I was in.

Unfortunately, I had to help several clients in So California file the SS8s because the companies were doing just flagrant violations. Ugh...

reply to post by ownbestenemy


It only becomes nefarious when a general contractor hires a bunch of casual labourers over a long period of time and demands that these "casual workers" must be on time every day and work until a specified time with scheduled breaks, no conflict of interest working for other employers, must be available at the employers beckon call, etc.

A general contractor hires sub-contractors (self-employed plumbers, electricians, drywallers, roofers, etc) all the time and is nothing unusual. It's when you get into the non-professional "casual labourers" that can become a slippery slope of breaking the law to save a few bucks.

In Canada it's become a very fine line and, no doubt, has become a huge thorn in the derriere for general contractors who operate their business on the up and up.

Contract employment agreements have become an absolute necessity for all general contractors these days in order to cover their butts should anyone become disgruntled and make a phone call to the Labour Standards Board.

There is educational value to this thread. It is the responsibility of both parties to understand their relationship or agreement of employment. Throughout this thread, I may have have been seen as sticking my head in the sand, saying there is no abuse, but really I know there is. There is abuse in everything around us.

In the case of employment and increasingly in this environment, we like to point the finger at the big-bad business owners and the practices they engage in. While there are a number of bad-apples out there that willfully circumvent the rules, there are also willful participants.

As I stated before, my dad utilized this practice in his business, but did so in a legal manner. Because of this, his overhead was significantly lower that if he were to employ: an electrician, a stone-mason, a roofer, etc. When used correctly, the practice and rule makes sense. My dad wasn't hiring people to work for him on a permanent basis or even full-time basis. He was hiring them for a specific job in which their skill-set was most suitable.

reply to post by Mountainmeg

I was talking about licensing requirements being state regulated.

The self-employment tax rate (social security and medicare) for 2011 was 13.3%, thanks to the Tax relief act. I don't know if it was extended. A big bite still, but half of that tax is deductible on Schedule A.

Originally posted by hadriana
reply to post by Phage

 

Well that's what I think TOO!
I mean like, you are going to tell someone you have to be here at 8 am and put together these widgets until 6pm with a 30 minute lunch break - you should be a darn employee. NOT someone making MINIMUM wage or just a bit better on a 1099.

This kind of situation would be a prime example of an employer breaking the law.

reply to post by hadriana


You can bust 'em but it doesn't get you a job.

Originally posted by hadriana
reply to post by ownbestenemy

 

I'm seeing a whole lot of it in the housing market, prefab, design, supplier, ect.

It is because of the excessive costs of worker's compensation.

There's another underhanded way that employers are getting around things nowadays too:

Temporary term contract employees.

Example: The employer hires you on a 3 month contract (temp employee) with an option for renewal. So all they do is keep renewing your contract. This saves them thousands of dollars of not having to put you on the company benefits plan, etc.

The most guilty party who pulls this crap all the time and is well known for doing it over the years ?
Revenue Canada.

Yup, I know "temporary" employees who have been working for Revenue Canada for 5-10 years.

I don't know why you're referring to it as 1099. Must be a new fad or something. You are either an employee or subcontractor doing labor for the company. If the contract stipulates to do the contracted labor in a specific way than it has to be done that way. You don't always have the freedom to alter the policy. I hired a few people to do specific jobs when I was busy and issued them 1099s. When you are subcontracted to do work you are also liable for the work and are required many times to be self insured. It depends on the contract. You also are required to pay in you're full social security including the employers part unless stipulated. There are a lot of differences. You probably will not qualify for unemployment either. This is something that has been done for years. It's nothing new but the employers may be opting to do more subcontracting now. At least they are giving people work so I wouldn't complain about it. They may hire the worker when things get better.

Originally posted by CranialSponge
There's another underhanded way that employers are getting around things nowadays too:

Temporary term contract employees.

Example: The employer hires you on a 3 month contract (temp employee) with an option for renewal. So all they do is keep renewing your contract. This saves them thousands of dollars of not having to put you on the company benefits plan, etc.

The most guilty party who pulls this crap all the time and is well known for doing it over the years ?
Revenue Canada.

Yup, I know "temporary" employees who have been working for Revenue Canada for 5-10 years.

DND does it( term contracts) too to keep the unions in check.

Originally posted by rickymouse
I don't know why you're referring to it as 1099. Must be a new fad or something. You are either an employee or subcontractor doing labor for the company.

I'm not sure what else to call it - but since you said that I googled it and found this link: www.stopworkerabuse.org... they call it worker abuse and cite misclassifying workers as 1099. Interestingly, they mention construction abuse as well.

I also saw where the IRS was trying to find instances of it in 2010. I'm not sure how they are going to be able to do that unless people report their employer.

I have a small store and I have one 1099 employee, if I were to have him as a regular employee I would not be able to keep him. The taxes to have him as a regular employee are too high. The store is open X hours per week and he shows up and works those hours- I do not tell him to be there at 9:45 or leave at 6:30- he does this on his own. Since the business has federal requirements and this 1099 is listed as a responsible person- he is required to do various functions, but we as the company are not dictating that the 1099 employee do so. So he does what the Federal paperwork says. I know that it is razor thin, but we are still within what the law says. I pay self-employment taxes, but I have some write offs to counter some of this.

The problem that employee taxes are too high for small business and my beliefs is that we pay too much tax. We are taxed to work, we are taxed on inventory at the end of the year, we are taxed on every little thing. A customer buys a product in my store they pay local tax, but if they buy the same item in another state they do not pay a tax.

Many Employers try this scheme just to find themselves in extremely hot water with the IRS.

The IRS, on their Web Site, has a list of question an employee or employer can use to determine if the elope falls under the 1099 rules.

One of the rules involved scheduling of work times.

The 1099 employee chooses their own schedule.

Think of it this way, you hire a contractor to do a job, the contractor is in sole control of when the job is performed. The contractor, wanting to provide good service will attempt to perform the work when it is convent for his customer, but the contractor still is the one who actually makes the schedule, or he doesn’t take the contract.

Tools of the trade is anther question the IRS uses to determine the status of a 1099 worker. Does the Employee or the Employer supply the tools used to perform the task at hand. If it is the Employer that supplies the tools of the trade, well this is telling the IRS that the Employer actually has an employee.

The reason Employer’s do this 1099 stunt is to save 7and a half percent on SSN taxes, making the employee pay the full SSN requirement.

If you feel that you are a victim of this scam all is required is for you tell the IRS and you can have the Employer pay up.

Plain and simple... the 1099 is more predominant because when an employer "lays off" a 1099 worker it doesn't show up in the unemployment figures because generally speaking a 1099 employee is not eligible for unemployment benefits...

Anyone that actually thinks this nation's jobless rate is under 11% is a flat out moron... it's all a numbers game... and point blank... we're losing...

Let me apologize... I should have said "is either an idiot or a flat out bought and paid for talking head liar"...

I just wanted to clarify that point if there was anyone that thought I didn't explain fully enough in the post above...

Originally posted by Phage
reply to post by Mountainmeg

 

I was talking about licensing requirements being state regulated.

The self-employment tax rate (social security and medicare) for 2011 was 13.3%, thanks to the Tax relief act. I don't know if it was extended. A big bite still, but half of that tax is deductible on Schedule A.

Yep on the 13.3%. As stated, it's been 3 yrs for me - no tax relief then. And it's subtracted as an adjustment to income on the front page of the 1040 or 1040A. Yippee, you get half of your self employment tax multiplied by your marginal tax rate.