Author Topic: Anyone know employment law?  (Read 3425 times)

garyk/nm

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Anyone know employment law?
« on: March 10, 2005, 04:33:48 AM »
Just finished doing my taxes* ( :evil: ), and while going through Sched. C info, came up with this question: Is it legal for an employer to classify someone as both an employee and an independent contractor? I thought it was one or the other. One of my jobs last year was in real estate, and I was treated in this manner.  Got a small salary (equiv. to min wage) for which withholding was taken, but my commissions were treated as an indep contractor (no withholding).

*Caveat: garyk/nm will be in rant mode for several days and can not be relied on to respond rationally.

Guest

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Anyone know employment law?
« Reply #1 on: March 10, 2005, 01:05:31 PM »
If the pay was for the same work, I don't believe they can do this.

One of the keys to whether or not someone is an IC is how much they control the job: Hours, methods, etc. If they're treating you as an employee for part of the job, they'd almost have to consider you an employee for the whole thing. Unless I'm missing something big here.

Larry Ashcraft

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Anyone know employment law?
« Reply #2 on: March 10, 2005, 01:39:16 PM »
I don't believe they can do that, but it may vary by state law.  A customer of mine was an auditor for the state, he checked company's payrolls for abuses of I/C payments.  He told me that in order for an employee to be classified as an I/C, you could tell him what you wanted done, but not when or how to do it.  The employer also cannot provide tools or supplies to the contractor.

You may want to call your state revenue service and find out what the rules are there.

garyk/nm

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Anyone know employment law?
« Reply #3 on: March 10, 2005, 03:12:34 PM »
Thank you both for your replies. I believe that the salary portion was paid so that they could control all aspects (hours, methods, dress code), but I don't understand why they would then consider me an IC for the balance.  Color me confused.

ps: this is not a small local company. It is part of a large national holding company.

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Anyone know employment law?
« Reply #4 on: March 12, 2005, 01:33:08 PM »
Probably so they don't have to pay payroll taxes on the amount. Smiley

Cindog

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Anyone know employment law?
« Reply #5 on: March 12, 2005, 04:22:42 PM »
The IRS used to use what was known as the "20 factor" test to determine whether someone was an employee or an independent contractor.  Congress pushed the IRS to simplify things and the IRS refined the test into eleven main tests and organinzing them into three main groups:  behavioral control, financial control, and type of relationship of the parties.  You can read the factors for yourself, along with comments about each at the following goverment publication:

 http://www.irs.gov/pub/irs-pdf/p15a.pdf

Go through the tests yourself and see what you can come up with.  Your company can get into some serious problems if they are paying you as an IC but you are really an EE.