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Independent Contractor Question/Issue

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MichiganBob

Junior Member
justalayman, we are dealing with a multibillion consumer products company. I was a manager there for 5 years in the early 90's. At the time there was a directive that no new billets would be approved. To fill the gap we used IC's, freelancers. Some of them worked for us 8-10 months out of the year on the complex under direct supervision for many years. After a number of years upper management informed us that IC's had to prove that they had other customers. We had to keep a file on each person with a business card and other "proof" that they had other clients. Eventually our IC's had to go through Manpower.

Many others in the company had offices, computers, phones, email, and worked there year round. Around 10 years ago there was a major downsizing and many of the downsized services were purchased from outside vendors.

I became one of those vendors providing video production services. I started my own company. Much of my work has been for my old company but it has all been done in my own facility or on location. They hire me as an outside vendor. I quote on individual jobs. A few years ago when the economy soured I downsized and am now a sole proprietor. I worked less than 50 days for them last year. They now appear to be saying that my status is questionable and it appears that in the future I must go through a staffing agency for all my work, even though I have other clients and in no way see myself as an employee.

There are other businesses and individuals onn the list that are in no way employees. I fear that if I refuse to agree to the half dozen or so background checks they will refuse to work with me anymore or if I do agree i may be compromising my business and my standing with my other clients. In the creative industry, Art Directors and Marketing Departments are always looking for fresh talent. They may choose to give a $50K assignment to a nineteen year old. This would be a coup for that young person and would be most of their income for the year. Like someone paying a starving artist a lot of money for a painting. that might be their only sale for the year. Sorry for the rambling answer. I'm really wigged out about this.
 


justalayman

Senior Member
They now appear to be saying that my status is questionable and it appears that in the future I must go through a staffing agency for all my work, even though I have other clients and in no way see myself as an employee.
that is fully within their rights regardless of how you see things.

I don't agree with their reasoning but that doesn't change the fact it is their right to do what they are.

So, what it comes down to is; you either comply or not and live with the consequences.
 

owelesstax

Junior Member
To sum up

To finalize all of this.

You can "TRY" and do business for or with whomever you want and you can make it as difficult as possible (if you want for anyone to do business with you). The other party has the same rights. Which I think is the base for your concern. That the other side is making it uncomfortable for you to continue doing business with them.

That leads to, "you have a right to comply or refuse". And then they have a right to make a decision based on your choice. Welcome to being a business owner.

They have a real concern, that if any one person is reclassified as a "commonlaw employee" from IC, that they will be responsible for all the back taxes, plus penalties and interest (not just benefits).

I imagine that you want to be an IC because they offer a higher gross payment, than they would if you were an employee where a huge amount would go to Payroll taxes.

You get a benefit from the company doing business that way. But you can choose to change.

and finally, the thing that no one else has said:

If you were providng that service, not as an individual but as a real corporation, you couldn't be construed as a common law employee. You wouldn't be filling out all these questionaires. Your employer couldn't get spanked with back taxes and penalties and interest, and you'd be paying lower taxes on your income.
 
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