Employer not withholding SS etc.

[traveler1938]

What is the name of your state? TX.

I have several questions concerning my situation.
First off, when we signed this agreement ( See contract below with the names changed) with XXXXXX RV Resort which is in South Texas, we were working at an RV Resort in Calif. 2000 miles away. We assumed that they would be withholding SS and Federal Income Tax as is normally done. We are full timers meaning we live full-time in our RV, and we are Texans, but work for short periods of time at RV parks all over the US. When we got here and started training, they said, by the way we don’t withhold SS or Income tax, so we would have to pay our own SS and income Taxes. They are paying by Check, but as if cash, because they are not reporting it,( they told us that it was up to us if we wanted to report our income to the IRS or not, which we are) no 1099 or W2. I take it they are classifying us as independent contractors, which if so, we should still get a 1099 for. We had traveled almost 2000 miles to get here, so we were stuck and decided to make the best of it. Then we found out that we were wrongly classified, according to the IRS rules, because they set the schedule. ( days, time, and Hrs worked and how to do the job) According to the IRS they could be fined for wrongly classifying employees. We also have to live on the premisses with the first 60 hrs going to our site rent. See contract below Item # 1.

My question is; #1. Is it legal for them to not do withholding and pay their 1/2 of our SS tax.

#2. Is it legal for them to not have us covered under Workman's comp law. See item # 5 below.

#3. Under #6 below, ( We further agree if WE terminate the agreement prior to the above dates, we will pay our electrical costs for the occupied site.) Does this mean we are liable for our electric the whole time we are here, or just for the last month, if they terminate us or if we leave early. My worry/problem is that they could wait until the 11th month and then fire us for “whatever” and then charge us for our electric for that 11 months.

#4. What if any is my liability in this situation. i.e. Am I legally responsible in any way for not reporting any of these things listed above if they are illegalities by my employer?

I have not discussed any of this with my employer at this time because I don’t want to cause any trouble etc. until I find out the answers to my questions above.
There may be some other ( legal) things wrong here that I am not aware of. Please advise or point me in the right direction. Any help would be much appreciated. JJ




CONTRACT



We, Bob Doe and Jane Doe agree to the following terms and conditions with XXXXXX RV Resort hereafter called ( The Smiths):

This agreement will become affective upon signing. On the job training will begin approx. 1 week prior to September 27, 2004. This agreement is effective to September 20, 2005 and may be extended upon agreement of both parties.

1. The Smiths shall provide a site 1 week prior to September 27, 2004 complete with water, sewer, electrical and telephone at no charge in exchange for duties performed at 60 hours per month, beginning September 20, 2004. Duties as requested by The Smiths.

2. Beginning September 20, 2004, all additional hours worked will be reimbursed at $7.50 per hour per person due and payable by the 3rd day of the month following.

3. We shall keep the record of extra hours in the office and said hours shall be verified and agreed to by The Smiths prior to payment.

4. We shall be responsible to provide our own medical and insurance coverage.

5. XXXXXX RV Resort/The Smiths shall not be liable and shall not be held accountable in the event of any injury resulting from duties performed for XXXXXX RV Resort for the length of the agreement.

6. We agree that if either party terminates the agreement prior to the above date, termination shall be given in writing with 30 days notice. We further agree if WE terminate the agreement prior to the above dates, we will pay our electrical costs for the occupied site. We
agree to abide by all rules and regulations and the condominium documents governing XXXXXX RV Resort.

7. Confidentiality and privacy of this agreement, the terms and conditions and the duties are extremely
important. The agreement and duties shall not be discussed with site owners, Board members or guests
of XXXXXX and shall remain between ourselves and The Smiths.

Duties will include but are not limited to:

Site improvement Welcome Center general
maintenance
General grounds clean up Guest registration
Lawn cutting Various office/computer
duties
Banking duties
Planting/weeding Customer service
Pool maintenance & clean up Escort RV parking



Agreed:_________________________________________
signature

__________________________________________
signature

Date___________________

 

[pattytx]

Just off the top of my head, you sound like employees to me, not independent contractors. Assuming they tell you what to do, how to do it, when to do it, provide you the tools to do it, and that they are paying you by the hour, all add up to your being a nonexempt employee.

Having said this, and if in fact, my assumption is correct, here we go again with the "employee" helping the "employer" avoid his legal responsibilities as an employer, including employment tax withholding.

Even if he is treating you as independent contractors in error, either intentional or unintentional, if each of you separately earns $600 or more in a year, he must give you a 1099-MISC. You must report your income on your 1040, regardless of the amount or whether you receive a 1099 or not, and pay Self-Employment tax, which is in reality, both portions of Social Security and Medicare tax.

I would recommend contacting the Texas Workforce Commission and telling them you believe you have been misclassified and that you should be an employee and see what they say. They will probably investigate on your behalf.

Good luck.

 

[traveler1938]

Just off the top of my head, you sound like employees to me, not independent contractors. Assuming they tell you what to do, how to do it, when to do it, provide you the tools to do it, and that they are paying you by the hour, all add up to your being a nonexempt employee.

Having said this, and if in fact, my assumption is correct, here we go again with the "employee" helping the "employer" avoid his legal responsibilities as an employer, including employment tax withholding.

Even if he is treating you as independent contractors in error, either intentional or unintentional, if each of you separately earns $600 or more in a year, he must give you a 1099-MISC. You must report your income on your 1040, regardless of the amount or whether you receive a 1099 or not, and pay Self-Employment tax, which is in reality, both portions of Social Security and Medicare tax.

I would recommend contacting the Texas Workforce Commission and telling them you believe you have been misclassified and that you should be an employee and see what they say. They will probably investigate on your behalf.

Good luck.

Thank you for the reply.
I know from reading the section on "Independant Contractor vs Employee" that we should be classified as Employees. And yes they tell us what to do, how to do it, when to do it, provide you the tools to do it, and that they are paying us by the hour. What I don't know is if there are any exemptions etc that they may be using. I know some states have exemptions on "Workers Comp" if the employer has less than 3-5 employees. I don't know if Texas has any exemptions or not . Not sure about the SS, workmans comp, etc if there are exemptions for small employers or if it is mandatory for all employers. I even gave my employer an article from Workamper magazine (an RV magazine that advertises RV jobs all over the US) about "Independant Contractor vs Employee" so they are aware of the situation.
And yes we make over (way over) $ 600.00 each on a yearly basis. Around $ 600 each monthly.
I'm holding off on calling the Texas Workforce Commission until I get some more definitive answers. Hopefully I will get some more people responding to this thread. JJ

 

[pattytx]

Texas is one of the few states that do not require employers to provide Worker's Compensation Insurance, although most do.

Regarding classification of employees, different governmental agencies can define what they consider an employee. The criteria to which I referred is a short but critical list of factors that the IRS uses and is the most common minimum criteria among agencies. With the IRS, there is no minimum number of employees required to consider; the company could have one employee only, and still have to follow those rules.

Again, I would recommend talking to the TWC. They would be your first step. If, for some reason, the TWC determines that you are not employees, then I would contact your local office of the Federal Dept. of Labor.