1099 Jobs and CA EDD

[graceous]

What is the name of your state (only U.S. law)? California

I am going to interview for a "contractor" position that is 20 hours a week and pays very well. In fact, it pays more than my previous job. I am so aware of how these so-called contractor jobs are misclassified, and I, of course, want to make a case for becoming an employee, not a contractor, but this kind of stuff seems rampant in my field. It seems like the perfect position in many ways, using my skills and education. I am also receiving EDD benefits that are over $400 a week, so I am assuming I am not going to be eligible for any benefits if I work at this position for, as an example, 6 months, and the job ends, even though my claim is valid for a one-year period. I have even heard that if one works only two weeks at a temp job they have to open a brand new claim.

Appreciate any info on this topic, thanks.

 

[eerelations]

You do realize that any work you do as an IC will not count towards any future UI claims, right?

 

[eerelations]

Oh and BTW Esteemed Colleagues, post history.

 

[commentator]

Hi there, graceous! Nope, if they are calling you a 1099 contractor, they are not paying in employer taxes. When the job ends, for the purposes of opening another unemployment claim, it will be as though NOTHING has happened. You will have zero monetary eligibility for these quarters you have worked, when it comes to calculating a new unemployment claim.

The reason they are paying you more and pretending you are a contractor is so they don't have to pay in, and at the end of the year, is it really really more money than you were making, really?? Seriously, when it comes time to pay in your income tax for the year and you have had zero take outs? Read the definitions of an independent contractor, and realize that you will be getting none of the benefits of this arrangement (ability to set your own hours, ability to supervise your own workload) and all of the disadvantages. Such as that there's no unemployment, no taxes taken out, no protection if the employer suddenly forgets to pay you, or underpays you or whatever they do to you. Any employer who wants to misclassify you to save and create a position that is illegal to avoid their obligations is not, in my honest opinion, anyone you want to waste time working for.

But for unemployment insurance purposes, right now, if you choose to work it, it's as though this job never existed. So you stop your unemployment claim, right? Do not even THINK about working one minute for this 1099 situation and filing a claim for unemployment insurance at the same time. Because I can promise you one thing. When you file your state and federal income taxes after this year, if you have a 1099 coming in and a period in which you drew unemployment benefits, the system is going to pull this up and your claim is going to be scraped through and examined and you'll probably be called in and checked on and your days, hours and minutes of when you drew and when you worked as an independent contractor will be compared. Make sure you pass muster on this and did not work one minute that you were filing an unemployment claim for. By ceasing to certify for weeks that have passed, you have stopped your claim, and rendered yourself ineligible for unemployment after the first week you have worked and made more money in any Sunday through Saturday in gross wages for this "contract" than you could've drawn in unemployment, you've removed yourself from the labor market. Make sure you've done this.

Then the job ends, right? Say you take the job, stop drawing unemployment after drawing 6 weeks of benefits. You work say, three months, and then are laid off let go quit cease to work the job ends the employer dies stops paying you....whatever. You re open your unemployment claim. It won't be a problem. Between now and the benefit year ending date on your claim papers, which is about a solid year from the date your claim was filed, you will still have a certain number of weeks to draw benefits, probably about 20. You are not starting a new claim. You are re opening the claim you already have in effect for one year from the date the original claim was filed.

This 20 weeks you had left on the claim hypothetically puts you on up to about August or September. You run out of benefits. No more unemployment, regardless of circumstances, until that benefit year (BYE) has passed. Say that BYE date is December, 2017. After that date in 2017, you can reapply for another claim. But guess what? There's no work, no quarters of wages showing up in that period of time you worked as a 1099 contractor. There's nothing for them to call "reearnings", which is a requirement to re open the claim. Wages you earned as a 1099 don't count as reearnings, and do not go into the calculation of a new claim.

The job did not exist, for unemployment purposes, unless, when it ended, you reopened your claim, and at the same time, issued a complaint against your 1099 employer stating that they misclassified you. It wouldn't have anything to do with your current unemployment claim, but eventually the DOL might have gone back and forced the employer to reclassify employees correctly. It's iffy. Might or might not change your eventual unemployment situation.

My best advice is DO NOT WORK FOR AN EMPLOYER AS A MISCLASSIFIED EMPLOYEE PAID WITH A 1099. Its a bad idea. You generally get what you deserve in this situation.

 

[Chyvan]

the DOL might have gone back and forced the employer to reclassify employees correctly. It's iffy.

Maybe in TN, it's iffy. In CA, they will do the work if the claimant asks and make a determination. Last time it happened, the claimant put in the request for reclassification on 12/21/16, and the investigation was completed on 1/11/17, and he was found to be an employee after all.

 

[graceous]

Thanks for all the responses! No, not a good deal in terms of lack of EDD benefits, more taxes, lack of workers comp coverage, etc. I am going to have a discussion with this recruiter as to why this employer wants to pay me as an IC.

And that is good news, Chyvan, with the responsiveness of the reclassification.

 

[eerelations]

Thanks for all the responses! No, not a good deal in terms of lack of EDD benefits, more taxes, lack of workers comp coverage, etc. I am going to have a discussion with this recruiter as to why this employer wants to pay me as an IC.

And that is good news, Chyvan, with the responsiveness of the reclassification.

This employer wants to pay you as an IC because it's cheaper. Period. That's the reason they always want to do it.

And no amount of talking to recruiters is going to change that, the minute you start talking to the recruiter about it is the same minute that recruiter is going to put you on the back burner job-wise.

Sorry about that, but it's true, this is the way it is. And while I may sound cynical, I have been up to my neck in this contractor vs employee crap for twenty years now, and this is just how it works.

 

[Zigner]

What is the name of your state (only U.S. law)? California

I am going to interview for a "contractor" position that is 20 hours a week and pays very well. In fact, it pays more than my previous job. I am so aware of how these so-called contractor jobs are misclassified...

What are your actual job duties going to be? Not the title, that actual duties.

 

[commentator]

It's iffy in every state in the union because this employer who's paying under the table, misclassifying, etc. may disappear, may re organize, may delay things by hiding records and denying everything, including that this person ever worked a minute for them. Of course the unemployment tax division in every state is going to go after them immediately if there's a whiff of misclassification. It's what they do. I spent some quality time in my life doing this sort of thing.

But that does not mean the wages paid on this job where you believe you were being misclassified are magically and promptly going to appear in this person's wage history for unemployment purposes. We don't even know from here whether the person really would be considered misclassified. It has to happen, and then a claim must be filed, and then a decision has to be made on misclassification and the misclassification, determination, investigation, collection, and the whole process is not a rapid or easy one, despite some subjective experience that it happens quickly and easily based on what the claimant tells the unemployment system or their own perception that they are misclassified.

And it is a very bad idea to work for an employer who will do this simply because of the iffy-ness of the whole situation. You already know they have no moral integrity, they have ever intention of cheating somebody, and they have no qualms about leaving or lying or ducking out on paying legitimate wages and/or taxes. It's like dating a cheating husband. When it's all said and done, you're with a jerk who will cheat.