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1099 Independent Contractor - Misclassification?

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drichardson90

Junior Member
I work in California as a 1099 I.C. full-time for a marketing company. My company has a large amount of their workforce as 1099's and I believe they are misclassifying us to avoid employment taxes. Is my company misclassifying me and, if so, what should I do about it? Please see the details below:

I accepted a job with a marketing firm 4 months ago as a sales person (account executive) and was hired as a 1099 independent contractor. I work for them full-time on a commission-only basis selling their marketing services to businesses. I work remotely from my home and my "boss" lives 2 hours away from me.

After being hired, I was told by my "boss" that I am required to do the following:
- watch several training videos
- visit my "boss" for a week for training purposes
- call into a company conference call twice weekly that tend to last 60+ mins
- call my "boss" once weekly to update him on my week's agenda
- set an average of 3 appointments per day (I don't average this amount, I would be "pushed out")
- fill out a 2 reports on a daily basis so that they can keep track of my actions
- memorize 9 scripts word-for-word to say when: giving a sales presentation, meeting people in networking groups, introducing myself in a network group, cold-calling businesses, canvassing businesses (walk-ins), calling personal contacts, calling personally recommended businesses, leaving voicemails, and handling objections given by business owners


These "requirements" were never outlined in the contract I signed upon getting hired. I have read many articles about businesses using 1099's illegally to avoid employment taxes. I have been told by others that I am misclassified and should be a w-2 employee. I have never come across another company that uses 1099's for this type of work and want to know if what the firm is doing is illegal. If so, what should I do?

I am more than happy to email a copy of my I.C. contract for review. Thanks.
 


LdiJ

Senior Member
I work in California as a 1099 I.C. full-time for a marketing company. My company has a large amount of their workforce as 1099's and I believe they are misclassifying us to avoid employment taxes. Is my company misclassifying me and, if so, what should I do about it? Please see the details below:

I accepted a job with a marketing firm 4 months ago as a sales person (account executive) and was hired as a 1099 independent contractor. I work for them full-time on a commission-only basis selling their marketing services to businesses. I work remotely from my home and my "boss" lives 2 hours away from me.

After being hired, I was told by my "boss" that I am required to do the following:
- watch several training videos
- visit my "boss" for a week for training purposes
- call into a company conference call twice weekly that tend to last 60+ mins
- call my "boss" once weekly to update him on my week's agenda
- set an average of 3 appointments per day (I don't average this amount, I would be "pushed out")
- fill out a 2 reports on a daily basis so that they can keep track of my actions
- memorize 9 scripts word-for-word to say when: giving a sales presentation, meeting people in networking groups, introducing myself in a network group, cold-calling businesses, canvassing businesses (walk-ins), calling personal contacts, calling personally recommended businesses, leaving voicemails, and handling objections given by business owners


These "requirements" were never outlined in the contract I signed upon getting hired. I have read many articles about businesses using 1099's illegally to avoid employment taxes. I have been told by others that I am misclassified and should be a w-2 employee. I have never come across another company that uses 1099's for this type of work and want to know if what the firm is doing is illegal. If so, what should I do?

I am more than happy to email a copy of my I.C. contract for review. Thanks.
If you believe that you are misclassified then you fill out form SS-8 and you submit it to the IRS. When you do your taxes, you fill out forms 8919 and 2106, instead of Schedule C.

The IRS will investigate. It will take quite some time. If they agree with you, action will be taken against your employer. If they disagree with you, you will have to amend your taxes.
 

drichardson90

Junior Member
If you believe that you are misclassified then you fill out form SS-8 and you submit it to the IRS. When you do your taxes, you fill out forms 8919 and 2106, instead of Schedule C.

The IRS will investigate. It will take quite some time. If they agree with you, action will be taken against your employer. If they disagree with you, you will have to amend your taxes.
Thank you for the information. Now, when I do fill out the ss-8 form and submit it what happens after they investigate? Will I be required to testify against the CEO of the company, will the other I.C.'s be investigated (since they have the same role/responsibilities as I do)? If the firm is found to be misclassifying about 20-30 of its workers (that's how many there currently are in my same role), what penalties would the IRS impose on the firm?

I just want to be sure that it's worth it on my end to go through with filing the ss-8 and opening an investigation. I really believe that my CEO is taking advantage of the 1099 system and should be held accountable, but will he even be punished if found guilty? I have read online that what typically happens is the worker gets reclassified as a w2. I can't imagine the CEO keeping me in his company once I file suit against him. Please, any/all detail or examples will be helpful, as this is a big decision I have to make.
 

ecmst12

Senior Member
There are some pretty big tax penalties for misclassifying workers. And yes, they would be reclassified and the employer made to pay his portion of the taxes. It would not be considered you filing suit against the employer and I'm not even sure that they would know which one of you submitted the request for investigation.
 

LdiJ

Senior Member
There are some pretty big tax penalties for misclassifying workers. And yes, they would be reclassified and the employer made to pay his portion of the taxes. It would not be considered you filing suit against the employer and I'm not even sure that they would know which one of you submitted the request for investigation.
They would not know as the position is not unique.
 

commentator

Senior Member
While you're doing all this, I also strongly suggest you find another place to work, and leave this business as soon as possible. Sitting in the same spot arguing with the employer about how you're being misclassified, which sounds like an across the board effort by a slightly skeevy employer to do this to everyone, doesn't indicate they're a good or reliable company to work for, is not a good use of your time.

"Will he be punished?" is a lot of garbage when it comes to employers vs. employees, you'll get very very little satisfaction out of this even if you pursue it fully, and you will not be able to make this the job you want it to be.
 

LdiJ

Senior Member
While you're doing all this, I also strongly suggest you find another place to work, and leave this business as soon as possible. Sitting in the same spot arguing with the employer about how you're being misclassified, which sounds like an across the board effort by a slightly skeevy employer to do this to everyone, doesn't indicate they're a good or reliable company to work for, is not a good use of your time.

"Will he be punished?" is a lot of garbage when it comes to employers vs. employees, you'll get very very little satisfaction out of this even if you pursue it fully, and you will not be able to make this the job you want it to be.
I agree that he should be looking for another job, particularly since if the IRS agrees that they are all misclassified the cost could put the employer out of business.

However, the actual punishments for the employer are pretty harsh...those punishments just benefit the employee only to the extent that the employee is relieved from the employer share of SS and medicare taxes, can file for unemployment, can be covered for worker's comp claims, etc.
 

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