WTF?!? Employers 2 redefine Your"employment" evade labor laws, skip"unemployment",social sec

I posted this to another thread but I thought it serious enough to warrent it's own thread and discussion about WHERE employment conditions are being steered by powerful Corporations.
I heard the "talking heads" discussing the DIRECTION American employment was being taken.

*Freelance*
*Self-employed*
*Contract*
*Temporary*
*Part Time*
Nobody is an "employee"
NO BENNIES AT ALL -No health care, no vacation, no sick or other leave, no retirement, no matching 401k
No matching social secuity contribution
NO UNEMPLOYMENT
***YOU WILL THEN START PAYING DOUBLE YOUR SOCIAL SECURITY TAX WHEN YOU GET RECLASSIFIED AS A SELF-EMPLOYED OR FREELANCE WORKER-you have to pay the "employer's share"****


In order to circumvent worker protection laws that "cut maximum possible profit" (and make living wages for employees......).EMPLOYERS WILL BE MOVING TO RECLASSIFY EMPLOYEES AS "TEMPORARY, FREELANCE, CONTRACT, SELF-EMPLOYED" and AVOID PAYING BENEFITS,(SICK PAY, VACATION, RETIREMENT) UNEMPLOYMENT, HEALTH CARE, SOCIAL SECURITY, AND ALSO AVOID ALL THE RECORD KEEPING THAT WILL TRANSFER TO THE EMPLOYEE HIMSELF.

You will NOT BE COUNTED as "unemployed" when your work stops or you are "laid off", NEITHER, IF THEY HAVE THEIR WAY, WILL YOU EVER BE ELIGIBLE FOR ANY UNEMPLOYMENT PAY. You will be paid as low as possible wages and it it YOUR PROBLEM to keep records for taxes. YOU WILL HAVE TO FILE TAXES FOUR TIMES A YEAR AS "SELF EMPLOYED."

The talking heads said the only survival mechanism for people in that situation would be to join organizations of other people so categorized as "freelance", contract, or self employed in order to be able to afford to purchase even a minimum of health insurance at a group rate.

THESE CUTTHROAT MULTINATIONAL CAPITALISTS and ROBBER BARONS ARE GOING TO REDUCE THE AMERICAN WORKER (NOT just the unemployed)TO ABJECT POVERTY.

WHY CAN'T WE STOP THIS MASSIVE TRANSFER OF WEALTH AND PLUNDERING OF AMERICA ABOUT TO DESTROY THE AMERICAN MIDDLE CLASS?

The only remaining question is what is the load limit on the horizontal portion of a lamp post.

ainitfunny
The talking heads said the only survival mechanism for people in that situation would be to join organizations of other people so categorized as "freelance", contract, or self employed in order to be able to afford to purchase even a minimum of health insurance at a group rate.


The gradual culling of the baby boomers is about to begin.

ainitfunny
WHY CAN'T WE STOP THIS MASSIVE TRANSFER OF WEALTH AND PLUNDERING OF AMERICA ABOUT TO DESTROY THE AMERICAN MIDDLE CLASS?

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The 'American Middle Class' is a group of people who work with a union’s protection. Without the unions these people would have much less in income, and there would be no middle class, just owners and slaves. The unions are necessary because an employee just can't walk up and ask the boss for a raise. Why, because they can't be accessed in a large company. Hench the worker forms a union to act as a bargaining power. So in order to break up a union the powers that be change a workers status to something other than employee. It's a method that the law allows. (As a side note, I once worked in one of these reclassified jobs. I even had to pay for the check they wrote to me when I got paid.. I didn't stay long)
The trouble arises when organized corruption takes over the union. Notice that the 'U' in USA stands for united, as in union. All unions work for awhile until the corruption runs rampant.
It's just a cycle of things I guess. Plunder, pillage, slavery, than repeat, do again, etc...

The American middle class is a fairytale and all fairytales come to an end sooner or later.

ainitfunny said:

THESE CUTTHROAT MULTINATIONAL CAPITALISTS and ROBBER BARONS ARE GOING TO REDUCE THE AMERICAN WORKER (NOT just the unemployed)TO ABJECT POVERTY.

Click to expand...

Don't blame them. Blame the government.

And unions.

L.A.B. said:

The only remaining question is what is the load limit on the horizontal portion of a lamp post.

Click to expand...

I don't understand your comment, please explain.

At present I work under the classification of PRN. They can work you up to 35 hours one week and as little as 2 hours the next to stay under the average so as not to pay benefits. Many hospitals and nursing homes are going this route.

They hire 3-4 people PRN to make up for one full time employee with benefits, saving them a bundle. It is legal and I'm sure we will see a lot more of this type of employment in the future.

THIS WAS NOT ABOUT UNION WORKERS!!!

This move was to thwart worker protection LAWS, not union agreements, that PROTECT even Y O U the NON-UNION worker with unemployment, social security, and often some kind of retirement, some vacation, working conditions, work hours, sick leave, etc.

IT TOOK 200 YEARS for our fathers to get those laws in place that raise workers above slaves, give them some rights and protections, and a reasonable hope of "pursuing happiness" and not just the next crust of bread.

FAIL TO DEFEND THOSE LAWS, LIKE WE HAVE FAILED TO DEFEND OUR FREEDOMS AND RIGHTS AND WE WILL BE RIGHT BACK TO A LAND OF SERFS AND A FEW RICH NOBILITY.

Sounds like a return to pre WWII working conditions. People have gotten spoiled with their work place "taking care" of them. It's about time people get back to being self responsible.

Don't complain too loud until you visit a good CPA to discover if you will benefit from the "new" work style.

I prefer to work as contract labor instead of as an employee. I benefit more than way. Right now it feels pretty good to have my own personal retirement set up MY way instead of being forced into a SS system that will probably never return a penny of what I invested in my early years.

ainitfunny said:

IT TOOK 200 YEARS for our fathers to get those laws in place that raise workers above slaves, give them some rights and protections, and a reasonable hope of "pursuing happiness" and not just the next crust of bread.

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And it took Obama 1 year to screw it up.

Corporations, just like citizens, are running scared. They're afraid of what the government is going to do next.

L.A.B. said:

The only remaining question is what is the load limit on the horizontal portion of a lamp post.

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You're way wrong. There is one other question:

What is the airspeed velocity of an unladen swallow?

Thank you for posting this AIF. I, too, have read of this coming change. Also mentioned was working for production piece-work, i.e. say if a person works for UPS loading packages they will get paid by each package they load, not per hour. Scary thoughts, especially as I get older....

Jaded

lectrickitty said:

Sounds like a return to pre WWII working conditions. People have gotten spoiled with their work place "taking care" of them. It's about time people get back to being self responsible.

Don't complain too loud until you visit a good CPA to discover if you will benefit from the "new" work style.

I prefer to work as contract labor instead of as an employee. I benefit more than way. Right now it feels pretty good to have my own personal retirement set up MY way instead of being forced into a SS system that will probably never return a penny of what I invested in my early years.

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If you think this new system will NOT drag YOU down with it, you are sorely mistaken. The middle class, especially the college educated middle class, still working, cannot envision how these changes could possibly undermine THEIR secure plans and lifestyles. Believe me, it is highly unlikely you are one of the ones intended to be left sitting in comfort when all the chairs are taken away. You belong to a targeted class of people who have yet to be plundered for your wealth, property, retirement and finally your talent (at menial wages). (I hope your retirement savings was all in TAX PAID monies.)

In the future people will seek to land a government job, NOT FOR THE HIGH WAGE, NOT FOR THE BENEFITS, because the wages will genuinely be lower than private wages, and the bennies will be gone, people will work for the city, state, or feds to have the JOB SECURITY ONLY. And, there will be standing room only waiting for those jobs.

The IRS may have something to say about this. You really have to go a long way to prove a worker to be a contractor and not an employee. They deny alot of businesses that try this. The IRS doesn't want to wait for quarterly taxes, they like it coming in monthly. May be a biiig war between business and the IRS before this goes too far.

ainitfunny said:

In the future people will seek to land a government job, NOT FOR THE HIGH WAGE, NOT FOR THE BENEFITS, because the wages will genuinely be lower than private wages, and the bennies will be gone, people will work for the city, state, or feds to have the JOB SECURITY ONLY. And, there will be standing room only waiting for those jobs.

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Of course. This is part of the socialist agenda. This is not news. And as the government takes over more and more businesses, more and more jobs will be "for the government". I'm pretty sure I'm not the only one who saw this coming.

As far as companies hiring "temp" employees, this has been going on for a long time. As of now, this is largely handled through employment agencies, so there are records kept and taxes paid. It could very easily change and eliminate temp agencies and head hunters.

ainitfunny
THIS WAS NOT ABOUT UNION WORKERS!!!

This move was to thwart worker protection LAWS, not union agreements, that PROTECT even Y O U the NON-UNION worker with unemployment, social security, and often some kind of retirement, some vacation, working conditions, work hours, sick leave, etc.

IT TOOK 200 YEARS for our fathers to get those laws in place that raise workers above slaves, give them some rights and protections, and a reasonable hope of "pursuing happiness" and not just the next crust of bread.

FAIL TO DEFEND THOSE LAWS, LIKE WE HAVE FAILED TO DEFEND OUR FREEDOMS AND RIGHTS AND WE WILL BE RIGHT BACK TO A LAND OF SERFS AND A FEW RICH NOBILITY.

Click to expand...

Where do you think the rights came from, individuals, standing on their hind legs and screaming at the ivory towers?
The reasons an un-unionized worker has any benefits 'provided by laws" is that they are a governmental stop gap to keep as many people un-unionized as possible.
Please don't get me wrong, I do not favor unions, but they do have their place, and most worker protection laws are modeled after union contract workers compensations.


But let me ask. Since this is an important post as you describe it..[THESE CUTTHROAT MULTINATIONAL CAPITALISTS and ROBBER BARONS ARE GOING TO REDUCE THE AMERICAN WORKER (NOT just the unemployed)TO ABJECT POVERTY.

WHY CAN'T WE STOP THIS MASSIVE TRANSFER OF WEALTH AND PLUNDERING OF AMERICA ABOUT TO DESTROY THE AMERICAN MIDDLE CLASS?]

Sooo, are you (ainitfunny) proposing to lead people into some type of a battle? Or are you just muck raking? I mean, what is the reason for the original "important" post?

BigBadBossyDog said:

You're way wrong. There is one other question:

What is the airspeed velocity of an unladen swallow?

Click to expand...

BigBadBossyDog, I had not taken that into consideration. I will have to give that some thought. I would have to take a guess. How about 11 meters per second/24MPH ballpark for the unladen European swallow of average size.

Much of what is said in the original post is simple incorrect. There are serious penalties for an employer to pay one as an independent contractor without strict compliance to certain rules. Any employer failing to comply should be turned in for violation.

FICA deposits are not double for independent contractors.

In connection to record keeping, to comply with the law, an employer must provide 1099’s to all independent contractors.

Depending on one’s revenue, one may have to deposit taxes more frequently then quarterly.

RJC:
There are serious penalties for an employer to pay one as an independent contractor without strict compliance to certain rules. Any employer failing to comply should be turned in for violation.

FICA deposits are not double for independent contractors.

In connection to record keeping, to comply with the law, an employer must provide 1099’s to all independent contractors.

Depending on one’s revenue, one may have to deposit taxes more frequently then quarterly.


The FICA tax rate IS almost double, I know, my spouse is a self employed contractor - in the 1970's his employer "dumped" their employees by mandating they become contractors. All the employees immediately lost benefits - no more health insurance, retirement funds, vacation days, sick days - and his wage is the same as it was in the early 80's, but liability, etc insurance cost much more.

Consider the cost of health insurance - on average approximately $15,000.00 per year.
If many employers decide to "dump" their employees and turn them into contractors most "self employed contractors" will no longer have health insurance - they will not be able to afford it. The so called "deduction" for self employed health insurance is almost NIL.

Since I lost my job neither my spouse or I or my children have health insurance, the way things are going we may never have it again.

info from IRS Website:

http://www.irs.gov/taxtopics/tc554.html

Topic 554 - Self-Employment Tax

You are self-employed for this purpose if you are a sole proprietor, an independent contractor, a partner in a partnership, a member of a single-member LLC or are otherwise in business for yourself. You usually must pay self-employment tax if you had net earnings from self-employment of $400 or more. Generally, the amount subject to self-employment tax is 92.35% of your net earnings from self-employment. Net earnings are calculated by subtracting ordinary and necessary trade or business expenses from the gross income you derived from your trade or business. You can be liable for paying self-employment tax even if you are currently receiving social security benefits.

If you had a small profit or net loss from your business but want to receive credit toward your social security coverage you may be eligible to use one of the two optional methods to compute your net earnings from self-employment. Refer to the Form 1040, Schedule SE Instructions to see if you qualify to use an optional method. An optional method may increase your earned income credit or the child and dependent care credit.

The self-employment tax rate is a percentage set by law of your net earnings from self-employment. This rate consists of 12.4% for Social Security and 2.9% for Medicare. The maximum amount of net earnings subject to the social security tax is set by law and changes annually. All of your net earnings are subject to the Medicare tax. Self-employment tax is computed on Form 1040, Schedule SE (PDF). When figuring your adjusted gross income on Form 1040, you can deduct one-half of your self-employment tax. This deduction is taken on Schedule SE. The Social Security Administration uses the information from Schedule SE to compute your benefits under the social security program.

If you are an employee of a church or qualified church-controlled organization that elected exemption from social security and Medicare taxes, and you are not yourself exempt from self-employment tax, you must pay self-employment tax if you are paid more than $108.28 in a year from the church or qualified church-controlled organization. If you are required to pay self–employment tax, you must file Form 1040 and attach Schedule SE. For more information on church related income and self–employment taxes, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.

More information on self–employment tax can be found in Publication 334, Tax Guide for Small Business.

More from the IRS: http://www.irs.gov/businesses/small/article/0,,id=115041,00.html

Who Is Considered Self-Employed?


Self-Employed

You are self-employed if either of the following applies to you:

* You carry on a trade or business as a sole proprietor; or
* You are a member of a partnership or limited liability company that files a Form 1065, U.S. Return of Partnership, that carries on a trade or business.

You are also self-employed if you have a part-time business, in addition to your regular job.

Independent Contractor

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax.

References/Related Topics

* Refer to Independent Contractors vs. Employees (Worker Classification) for helpful information in determining your status as an employee or an independent contractor.
* Self-Employed Individuals

... and:

Independent Contractor (Self-Employed) or Employee?


It is critical that you, the business owner, correctly determine whether the individuals providing services are employees or independent contractors. Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. You do not generally have to withhold or pay any taxes on payments to independent contractors. If you are an independent contractor and hire or subcontract work to others, you will want to review the information in this section to determine whether individuals you hire are independent contractors (subcontractors) or employees.

Before you can determine how to treat payments you make for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services may be -

* An independent contractor

* An employee (common-law employee)

* A statutory employee

* A statutory nonemployee

In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.

Common Law Rules

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.

Form SS-8

If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding (PDF) can be filed with the IRS. The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status.

Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8 (PDF).

Employment Tax Obligations

Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes.

*
Forms and associated taxes for independent contractors
*
Forms and associated taxes for employees

Misclassification of Employees

Consequences of Treating an Employee as an Independent Contractor
If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

Relief Provisions
If you have a reasonable basis for not treating a worker as an employee, you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements (PDF) for more information.

Misclassified Workers Can File Social Security Tax Form
Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation. See the full article Misclassified Workers to File New Social Security Tax Form for more information.

I appreciate what you have posted as the IRS law the way it is now what I have posted is WHERE IT IS GOING. Those laws will be CHANGED to benefit the employer.

A win win for Corporations.
Hire the PT worker to the lowest bidder, then demand higher productivity.
Clears them from many government's restraints.

As the supply and demand law applies. As PT worker base grows corps. Will have pick of the crop at low prices.

BBBD Unions could be forced out of the picture. Another win for the corps.

This sounds like the third world labor force in the making.
Another paragraph from the liberal's elective hope and change playbook.

It's all true but this is one of those cases....

Here's the view from working as a "temp" through a job broker, like a Kelly Girls or Manpower.

It is not bad.

There's a full range of these broker, out-source, surge-work, temp agencies. In addition to companies like Kelly Girls, there's IBM Global Services, Accenture, PricewaterhouseCoopers (PWC), Deloitte Touche Tohmatsu, Ernst & Young, KPMG, Oracle, Hewlett-Packard, Cisco.

This is not an evil conspiracy. This business has a long history. IBM Global Services. Business is highly competitive. If you want to retire in place with a guaranteed welfare queen-like, GM union employee stipend, temping, consultancies, surge-work, outsourcing is not for you.

If it is, if you like the idea of setting your own path and basically having your own business, if this has some possibilities, continue reading.

These expenses are real.

15.3% to social security. (this is the both sides thing)
10% escrowed for holidays, sick leave, vacation.
7% private pension.
10% medical insurance and health spending account.
10% for the job broker's profit.

All that, and federal and state income tax, unemployment insurance, comes out of the monthly payment.

The company with the work pays a negotiated rate to the job broker. It should be high enough to cover these expenses and still pay the "temp" a living wage. If it's not, why are you doing it?

You can do OK as a temp. It should not be a killing existence. The trick is to hook up with a good broker or temp agency. These are also called "Job Shops" in the technology arena.

Bad ones will hammer you on rates but a steady pay check makes up for lots of hammering. A good one will treat you fairly because you earn them money.

The question is, who writes the check to the IRS, Blue Cross, Fidelity, State Unemployment, and who escrows the leave time, the health savings money.

The answer is two-fold. The IRS doesn't care who does it as long as someone writes the appropriate check on a timely basis. BC/BS, Fidelity, are up to you, they don't care either but you probably want their services.

The company is not going to write the checks. It's up to you and the job broker to work it out.

If you have a W2 relationship with the broker, they'll offer a benefits package and they'll pay. The money comes out of the negotiated rate.

Some tech workers prefer a 1099 relationship because it gives them flexibility. As a 1099'er, you still pay but, for example, you can put more money into Health Savings than into vacation escrow. It's what's important to you.

This is not a new thing. Temps, outsourcing, job-shops, consultancies, have been around longer than I've been working.

In fact, those of you who are out of work, consider a temp job. It's as real as anything.

This is not like the guys standing in front of the 7-11 at 5:00 AM.

You can work contract, work temp-2-perm, work as an employee of the temp agency. You go in dressed like before (Maybe a little better), go to your desk, do your 8, clock your time, and leave. You do the work, you get paid.

Typical contract jobs run 3 to 6 months but are usually renewed. Some are very short, surge work to fill in when people are out. That tends to be receptionist, security guard, and typing work. Some times the work dries up and you have to move on.

If you are skilled up on a useful technology, then odds are, once you get in and they see what you can do, they will keep you on.

If you are out of work, take what you can get. In 3 or 6 months, when the contract rolls over, you can always get better. You have to keep your eyes and ears open.

If you're in with a bunch of temps from other brokers and you're a good worker, they will notice. Pay attention to secret signals that could be subtle recruiting overtures. Usually contracts spell out that recruiting is forbidden at the jobsites.

It might not be top dollar but it's a paycheck.

Most "powerful Corporations" are doing their best just to hang on while paying taxes, health care for workers, and trying to figure out what new regulations they will be hit with next. All of this is happening while products and/or services they provide have a much lower profit margin. I am in a Christian group with several people from higer management in some small corps. The HR people in these corps are almost in tears because they are laying off people with little hope for re-employment. Some are thinking of moving out of the US to avoid new regulations like cap and trade. Our government has become the cause of many of our problems, not the cure.

ainitfunny said:

In the future people will seek to land a government job, NOT FOR THE HIGH WAGE, NOT FOR THE BENEFITS, because the wages will genuinely be lower than private wages, and the bennies will be gone, people will work for the city, state, or feds to have the JOB SECURITY ONLY. And, there will be standing room only waiting for those jobs.

Click to expand...

Not true.

The AVERAGE government job nationwide pays over $75,000 in pay and benefits.*
The average private sector job nationwide pays just under $45,000.00 with benefits.

Government jobs are not secure at all. They depend upon tax money.
The federal government and most state, county and city governments are in a sea of red ink coupled with falling, never to come back, tax revenue and a lost tax base.

Government jobs will join the private sector in 2011 and 2012 in the layoff category.

* Keyword: AVERAGE. This comes from the Department of Labor. Please note this before the I get a response from a government employed poster who does not make $75,000.00. It's the government's statistic, take it up with them.

I worked as an Independent Contractor ("Job Shopper") from 2001 to 2007. Overall it was pretty good. I had a lot of write offs that aren't normally available. Pay was pretty good, I liked that , at least in my case, if I finished early for the day, I could go home early and nobody said anything. Downside in my case was it seemed like nobody was paying their bills. Banks will put a 10 day hold on paychecks. "This may be some sort of paycheck to you sir, but to us it is a two-party check and subject to a hold." This was from the same bank the check was written on!
The working conditions in the Original Post were what prevailed 100 years ago. Read any good history book on the Labor Movement with riots, police beating strikers, etc. Henry Ford hired a private police force to beat down strikers. With Ford, the issue was not pay, Ford paid wages that were considerably above average but the way the slaves...err employees got treated was awful.

Can you blame them?

If you pay double as a "self-employed, independent contractor" does the employer not pay double as well?

When government dumps the burden of supporting the economy on business (50% of citizens don't pay taxes) business has to look for ways to avoid taxes and cut costs.

It is simple, really.

Yes, it guts the middle class.

Don't blame the small business man. Blame the Levithan that sucks the life blood out of the business he has built over the past decades.

As JohnnyMac said, when the government can't balance their budget, they come back for more. What do you expect the small business man to do?

It all comes down to ROI.

Without ROI, there is no reason to run a small business.

Palmetto

Yes, maybe this is exactly where things are headed.

But Aintitfunny, you have your government to blame for it.


The regs on handling a single 'standard' employee for a company has become so burdensome, tracking the laws and regulations for all the things you mentioned, from SS to Medicare, to pensions and retirements rules and regulations make it just too plain ridiculous to deal with it anymore for many companies, particularly small-to-midsize companies.


And when these same companies see Obamacare coming down the pike, or forced unionization from the falsely-named "Free Choice Act", they just say surrender and refuse to handle the overhead.

It's really just a rational decision. Not that it works out for the employee, but everytime the government throws on another burden, there WILL BE consequences.

I seriously doubt that the IRS would be pleased with allowing this type of empoyment changes. This would leave the door wide open for fraud and non paying of taxes - something the IRS hates.

My daughter worked for a company that changed all of their employees to contract to avoid the taxes and insurances. After she got hit with huge amounts of taxes due - she turned them in and the IRS went after them. The company was found liable for the taxes for all of their employees and closed it's doors, but my daughter didn't have to pay those huges taxes due.

The IRS is not going to want to give up this tool to collect taxes. Just can't see it happening.

Irish said:

I seriously doubt that the IRS would be pleased with allowing this type of empoyment changes. This would leave the door wide open for fraud and non paying of taxes - something the IRS hates.

My daughter worked for a company that changed all of their employees to contract to avoid the taxes and insurances. After she got hit with huge amounts of taxes due - she turned them in and the IRS went after them. The company was found liable for the taxes for all of their employees and closed it's doors, but my daughter didn't have to pay those huges taxes due.

The IRS is not going to want to give up this tool to collect taxes. Just can't see it happening.

Click to expand...

I worked for a company that did this. First they laid off most of the staff from one group. Then they contacted each individually and informed them they could come to work on a contract, 1099 basis only.

Many did it.

Why? Why not? It was still a job and while employees lost their benefits, they still would receive a paycheck. Further, they were able to expense their mileage to and from work, cell phone, even internet at home if they answered a single work email. These days a job in hand is worth no job for two years.

Did it stink? Sure, but it is legal. It is only legal if the employer pays the employees out of cash and does not report them as 1099. The employee has the burden of taxes under 1099 reporting.

Unless the government stops making it a liability to hire anyone, things will get worse. Soon, we will be working like illegals.

Maybe I see this wrong but you can't have your cake and eat it too. Seems like everyone here is bitching how the government needs to get it's nose out of private business then you start crying about how it needs to get involved well STFU. What you do is your deal, don't expect a company to take care of you, take care of yourself. As a contractor you decide how much you need to make to cover all these expenses and charge properly for it. Also expect to move from company to company to make a name for yourself as someone worth hiring for the rate you charge. Be in control of your own destiny. The weak will die.

I've worked contract for most of the last 30 years. I've always worked for a job shop that handled all the book keeping and paid benefits. Some paid better than others, which often mirrored the local economy. Generally, the job shop had an hourly billing rate to the client of 1.56 to 1.60%. This means they made .56 to .60 cents per hour for every $1.00 I made. They paid the matching S.S. and Medicare, Vacation/Holidays, a portion of Employee Health Insurance, Life insurance equal to one years salary, Safety equipment, Travel Expenses, 401K matching, Christmas Parties/fish fries/crawfish boils/BBQ's and such. They paid their office overhead out of this as well. Today, all the local job shops are hurting, but two years ago they were all fighting over the pool of skilled workers. Hourly rates shot up to over $60, but last year all the clients asked for wage concessions, and I took a $4 cut. That was about the time lay offs started, and in September my number came up. No one is hiring today. This is not the first time things have gone into the crapper around here, but it always has picked up after a year or two. This time it might not. I've always enjoyed the freedom to move around from job to job, but I have sat at the same desk for six years before. Most farm out jobs last one to two years, then if the job shop has work in house or another farm out, you roll into another client. They want to keep you billable. I've worked with people who sat at the same desk for as long as 14 years. One got laid off the same day as me.

Contractor, Txkstew, others...

Yep. This can be good.

As the unemployment rate is still under 7% around here, job-shop, temp, contract work is still available.

Rates might soften but that has not happened yet. In addition, some companies will lay off employees and keep the temps.

The other manifestation of that is telling employees that it's the highway or temp-way. Since we're already temps, we tend to be safe when that kind of cut comes.

johnnymac said:

I worked for a company that did this. First they laid off most of the staff from one group. Then they contacted each individually and informed them they could come to work on a contract, 1099 basis only.

Many did it.

Why? Why not? It was still a job and while employees lost their benefits, they still would receive a paycheck. Further, they were able to expense their mileage to and from work, cell phone, even internet at home if they answered a single work email. These days a job in hand is worth no job for two years.

Did it stink? Sure, but it is legal. It is only legal if the employer pays the employees out of cash and does not report them as 1099. The employee has the burden of taxes under 1099 reporting.

Unless the government stops making it a liability to hire anyone, things will get worse. Soon, we will be working like illegals.

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I went to an IRS business seminar, where the question of 1099 contractors status was discussed. The IRS guy said that if you are directed and supervised in your daily job activities and are told where and when to work, you are an Employee, and W2 withholding is required. The lady asking the question had a home health business, where she sent nurses out to peoples houses. She was going the 1099 route, and didn't like the answer the IRS guy gave her. Shocked, is how I'd describe her. Companies might do this and even get away with it, but if someone turns them in, they will get hammered big time.

Kent said:

Most "powerful Corporations" are doing their best just to hang on while paying taxes, health care for workers, and trying to figure out what new regulations they will be hit with next. All of this is happening while products and/or services they provide have a much lower profit margin. I am in a Christian group with several people from higer management in some small corps. The HR people in these corps are almost in tears because they are laying off people with little hope for re-employment. Some are thinking of moving out of the US to avoid new regulations like cap and trade. Our government has become the cause of many of our problems, not the cure.

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Yep. I've been preaching this for a long time. You ain't seen nothin' yet!

IMO, cap and trade is far more dangerous than the health care snafu.

L.A.B. said:

BigBadBossyDog, I had not taken that into consideration. I will have to give that some thought. I would have to take a guess. How about 11 meters per second/24MPH ballpark for the unladen European swallow of average size.

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A thoughtful answer, and accurate in its premise. I should have defined that my area of expertise lies in the area of the African swallow.

I worked as a contract computer consultant for most of the 90's. I learned that one can work directly for an agent (W-2), as a 1099, or as an incorporated entity (corp-to-corp). Of the three, the 1099 method is by far the least desirable. The best is corp-to-corp. If you've set-up your company properly, you can pay yourself whatever salary you want. You only pay income taxes and FICA on your salary. The corporate tax rates vary depending on how you structure. That should be a discussion between you and a qualified CPA or lawyer specializing in small business law.

But it CAN be pretty profitable and pay well, although not as goos as in the 90's.

But wow - those Free Market principles are working aren't they? Isn't is always about the bottom line, and those pesky workers want a living wage - too bad, so sad for them...just move their jobs overseas if they complain

inynmn said:

ainitfunny
The talking heads said the only survival mechanism for people in that situation would be to join organizations of other people so categorized as "freelance", contract, or self employed in order to be able to afford to purchase even a minimum of health insurance at a group rate.


The gradual culling of the baby boomers is about to begin.

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Aren't those organizations otherwise known as Unions? The Free Market doesn't allow for unions, what with their living wages and health care and overtime. There is no room for workers in the bottom line.

China demanded that Walmart allow unions when they began to expand their stores into that country. And Walmart INSTANTLY capitulated. In the US, they just won't open a store in the "problem area."

Dust in the Wind said:

The 'American Middle Class' is a group of people who work with a union’s protection. Without the unions these people would have much less in income, and there would be no middle class, just owners and slaves. The unions are necessary because an employee just can't walk up and ask the boss for a raise. Why, because they can't be accessed in a large company. Hench the worker forms a union to act as a bargaining power. So in order to break up a union the powers that be change a workers status to something other than employee. It's a method that the law allows. (As a side note, I once worked in one of these reclassified jobs. I even had to pay for the check they wrote to me when I got paid.. I didn't stay long)
The trouble arises when organized corruption takes over the union. Notice that the 'U' in USA stands for united, as in union. All unions work for awhile until the corruption runs rampant.
It's just a cycle of things I guess. Plunder, pillage, slavery, than repeat, do again, etc...

The American middle class is a fairytale and all fairytales come to an end sooner or later.

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You had to PAY for your check??!!

Unions are good only as long as the unions vote in good people to bargain for them. People being people, sometimes bad one's do get in, but they aren't wholly bad. The union DH belongs to, I've been to some of their meetings and they are good guys and gals who are state union workers. They really stand up for the workers, because they still work there too. It's voting in nationwide salaried workers who start besmirching the whole union process. Statewide=excellent; Nationwide=room for corruption.