Changing employment status due to decreased work.

[HannaB]

What is the name of your state (only U.S. law)? Maryland
My husband has worked as a W2 full time employee for 2 years for a company in Maryland that provides staff for facilities in Maryland, Virginia, DC and Pennsylvania. Because his employer will be losing their largest contract, my husband has been told he will most likely be asked to switch from a W2 to a 1099 employee in July. He will not be assured full time work (historically, 1099 peers have been assigned drastically reduced hours, some just one day/week); he will lose his benefits, including health insurance & educational/licensing expenses; and will have to travel farther to have work from this employer. As far as we know right now, there is little opportunity for full time W2 employment in his field in this area of MD, though he is willing to search for work. Can my husband collect unemployment, rather than be forced to accept the 1099 position, until he can find a better situation (which will most likely still be 1099 but hopefully with more hours/week)? We worry that if he does not accept the 1099 offer, he may be forced to resign or be terminated (not laid off), which will affect his eligibility for unemployment benefits; but if he does accept the 1099, he will also be ineligible for unemployment benefits. He is 60 years old so not yet eligible for SSI or Medicare. Thank you for any insight you can provide.

 

[LdiJ]

What is the name of your state (only U.S. law)? Maryland
My husband has worked as a W2 full time employee for 2 years for a company in Maryland that provides staff for facilities in Maryland, Virginia, DC and Pennsylvania. Because his employer will be losing their largest contract, my husband has been told he will most likely be asked to switch from a W2 to a 1099 employee in July. He will not be assured full time work (historically, 1099 peers have been assigned drastically reduced hours, some just one day/week); he will lose his benefits, including health insurance & educational/licensing expenses; and will have to travel farther to have work from this employer. As far as we know right now, there is little opportunity for full time W2 employment in his field in this area of MD, though he is willing to search for work. Can my husband collect unemployment, rather than be forced to accept the 1099 position, until he can find a better situation (which will most likely still be 1099 but hopefully with more hours/week)? We worry that if he does not accept the 1099 offer, he may be forced to resign or be terminated (not laid off), which will affect his eligibility for unemployment benefits; but if he does accept the 1099, he will also be ineligible for unemployment benefits. He is 60 years old so not yet eligible for SSI or Medicare. Thank you for any insight you can provide.

One of the people who are better versed in unemployment insurance law will come along, but one thing that your husband should be aware of is that there is no such things as a 1099 employee. Someone is either an employee who must be treated as an employee, or they are an independent contractor and are self employed.

Your husband's employer will likely be breaking the law if he treats your husband as a contractor. I really suggest that your husband look for a new job now.

 

[HannaB]

One of the people who are better versed in unemployment insurance law will come along, but one thing that your husband should be aware of is that there is no such things as a 1099 employee. Someone is either an employee who must be treated as an employee, or they are an independent contractor and are self employed.

Your husband's employer will likely be breaking the law if he treats your husband as a contractor. I really suggest that your husband look for a new job now.

My use of the term "1099 employee" is incorrect. They would ask him to be an independent contractor, 1099, and work for them if/when they have work for him. I guess my bottom line question is "can he apply for unemployment benefits once his full time position is over, even though he will have resigned or been terminated (not laid off, because he is being offered work, just not as a full time employee)?" His peers have not found full time work over the past few months, so we are reluctant to give up his present W2 position, which includes health insurance and other benefits, until the last minute.
Thank you for your thoughts.

 

[commentator]

The answer to your question is heck yes, he can most certainly apply for unemployment. Whether he is approved or not will depend on whether he is determined to have been fired without a valid misconduct reason, or he has voluntarily quit. This will not be determined by the employer, it will be determined by the agency after he has filed the claim. There is no downside to filing a claim, it costs nothing, and has no penalties attached.

A company is not making a legitimate job offer when they ask an employee to change to being a 1099 independent contractor. You are either an employee, or you are a contractor. If it is the same job, there is no way that you can change someone to a 1099 legally. The job is either an employee job, with all the requirements and sitpulations thereof, or being done by an independent contractor, which is a very very different job description. What these people are doing is illegal, and they'll eventually be caught at it, but in the meantime, he should not even consider accepting the contractor situation. They don't have to give him ANY work, not even a day or two here and there after he has agreed to it, he's just out of a job and no unemployment benefits either.

So what your husband needs to do is refuse to change. If they tell him he has to change or be fired, he still needs to say, "I'm sorry, but I do not want to be classified (actually it would be MISCLASSIFIED as a contractor, but he doesn't need to argue with them.) as a contractor. I want to continue to be a regular employee." Let them go on and fire him. They will want him to think this was a very bad thing, may threaten, may say it will "ruin his references" but that's because there's a monetary advantage for them in doing so. They want to get him to quit. Or to go to work as a contractor, with no benefits, no promise of any work at all. This would be gravy good for them!

AT NO TIME SHOULD HE SAY, I RESIGN, OR I'LL JUST HAVE TO QUIT, or I QUIT!! No matter what they say to him, threaten him with, etc, they are trying to get him to say he resigned, so they can avoid him getting approved for unemployment benefits. They have run out of work for him, and the honest thing to do, of course would be to say he is laid off due to lack of work, but many employers don't want to do that, and will pull all sorts of funny stuff to try to avoid him being approved to draw unemployment which costs them money.

The unemployment office people will have seen it all before. They will understand this situation. His employer is trying to "force a quit" by making the job into a contractor job, after which they will say, he quit to become a contractor, and he will not be able to draw benefits.

If he refuses to take the contractor offer, they may try to force him to quit by asking him to do stupid things that are not on his job description or try to insult him or harass him into quitting. He should not take the bait, but keep showing up and doing the job to the best of his abilities until they tell him to leave.

If they demand he sign paperwork that says he quit before he leaves, he can refuse to do so, or if they, for example say, "We will give you a severance, or a good reference (or something) if you sign this" he can go on and sign it, but when he files for unemployment, he needs to say he was fired, he is not out of work by his own choice and be very specific about how they forced him to sign this paper.

He needs to sign up for unemployment as soon as they tell him to leave, that he no longer has a job, regardless of the situation they do it in. It will take a while to get all worked out, it's not as cut and dried as a lack of work lay off, but eventually if he does it right, he has a pretty good chance he will be approved for benefits. He'd then be back paid from the time he first filed till the time he is approved, provided he keeps his weekly certifications up to date during the appeal process.

He should, in no way, specify that he only wants something part time or something because of his age. He must be fully available, with no restrictions for similar work, full time work, NOT as a contractor. If he found something else that perhaps wasn't in his field, or paid less, it still might be a better deal for him than what they offered him here. He should explore it.
Unemployment doesn't pay much, and doesn't last long, he'll probably want to go back to work quite soon. But he still needs to refuse this bogus "transfer" deal they're pulling, and file for unemployment to tide him over till he can find something else.

Is he the only employee that is being separated? Keep careful records of what they say and when they say it, regarding his termination and any employment issues. I gather this is perhaps a contractor who works people at a federal or government facility? If so, they must be extra careful to treat their employees in accordance with federal EEOC laws.

 

[HannaB]

The employer staffs free standing medical facilities and much of the work is done by 1099 contractors. Though my husband will be doing the same type of work as he is now, he won't have the set M-F schedule. This isn't unusual & he was frankly surprised that he was able to negotiate a W2 position when he first started working for this employer. His employer was truly blindsided by the loss of this major contract, and a few other W2 employees, who have seniority over him, have also been told that they will most likely be asked to change to 1099. I can understand the company's reasoning; if there's no work they can't afford to pay full time employees. We're just being very careful and trying to avoid taking any missteps that will affect possible benefits he may need on a hopefully short term basis. Thank you for your comments.

 

[LdiJ]

The employer staffs free standing medical facilities and much of the work is done by 1099 contractors. Though my husband will be doing the same type of work as he is now, he won't have the set M-F schedule. This isn't unusual & he was frankly surprised that he was able to negotiate a W2 position when he first started working for this employer. His employer was truly blindsided by the loss of this major contract, and a few other W2 employees, who have seniority over him, have also been told that they will most likely be asked to change to 1099. I can understand the company's reasoning; if there's no work they can't afford to pay full time employees. We're just being very careful and trying to avoid taking any missteps that will affect possible benefits he may need on a hopefully short term basis. Thank you for your comments.

Having hours reduced because full time hours are no longer available is totally different than being switched to a contractor.

 

[commentator]

The company's reasoning has no bearing on whether a person is a 1099 contractor or a regular employee. That they lost the contract is the reason why they should lay the employees off, which would entail unemployment benefits. They plain old just don't have the work for them, or don't have full time work for them.

Just that they lost a contract, or have less work available does not in any way mean it is any more legitimate to call the workers contractors now than ever. There are a whole list of definitions which determine if a person is a contractor, most of which I suspect these employees do not meet. Deciding to call them a contractor is like voting on what sex we want the class pet hampster to be. it's either one thing or the other, no matter what we want it to be.

After laying them off, they could negotiate part-time work from the employees if they later decide to do this. But honestly, I would not agree to work as a contractor in a job which sounds as if these are regular employees.

 

[HannaB]

The company's reasoning has no bearing on whether a person is a 1099 contractor or a regular employee. That they lost the contract is the reason why they should lay the employees off, which would entail unemployment benefits. They plain old just don't have the work for them, or don't have full time work for them.

After laying them off, they could negotiate part-time work from the employees if they later decide to do this.

I agree with this and when you come right down to it, it's really quite clear and simple. The ball is pretty much in their court because my husband will not resign (unless he finds a great job in the meantime) or offer any alternatives to his full time employment as a W2 with benefits. Hopefully they will do the right thing. Thank you for your reply!