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My wife was working full time but being paid as a 1099 instead of W-2

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Dynamo2000

Junior Member
What is the name of your state (only U.S. law)? Massachusetts
My wife 55 years of age, was working full time (50-60 hrs./wk) for the last 6 years for a physician but being paid as a 1099 instead of W-2. She earned about $52,000 per year. We recently found out that at least in Massachusetts this is illegal. She never received any benefits and nor did the doctor pay any social security taxes for her. What is the scope of damages she is entitled to try to reclaim? What about social security payments - how does that get accounted for now? Besides an attorney, are there any state offices we can turn to to try to file a claim? Is the physician guilty of just a civil offense(s) or is there possibly a criminal offense involved as well?
 


FlyingRon

Senior Member
She should file an SS-8 to get an official determination that she was an employee not an contractor. Her security and medicare she would already be paying as it is part of the Self-Employement tax. She can file a form 8919 to get credit for the part of that tax that would be the employer's share had she been so classified.

You didn't say just what she did for this doctor, but another issue is that she may not be an exempt employee either. In that case, he owes her overtime. You should file a complaint with the state department of labor if that is the case.
 

Dynamo2000

Junior Member
We filed a joint tax return. Her income was reported as 1099 income as that was the form we received from the doctor. She was a medical receptionist/secretary which included booking appointments for the doctor, etc. Does this entitle her to claim for overtime pay as well?
 

LdiJ

Senior Member
Its really important that misclassified workers start to seriously stick up for themselves and start reporting the employers who do this. The problem is becoming more and more rampant and employers won't stop doing it until they either get in trouble with the IRS and the DOL, or they start finding it impossible to find people who accept being misclassified.

I have a client whose situation is about the weirdest I have seen. She works for an insurance agent. Her employer REQUIRED her to set herself up as an S-corp in order to work for him...and required her to set up regular payroll for herself from her S-corp.
 

davew128

Senior Member
The IRS would be the agency responsible for investigating independent contractor fraud.
Not true. In Massachusetts it is a criminal offense to knowingly misclassify an employee as an independent contractor. The AG's office has issued memos on it before too.
 

cbg

I'm a Northern Girl
The operative word being, knowingly. While I am not remotely suggesting that there are never any employers who mis-classify employees deliberately (of course there are), the fact remains that many, many small business owners do so quite innocently. There is at least a reasonable chance that a doctor does not fully understand how he is supposed to manage things. Yes, he should. I'm not saying otherwise. I'm saying it's likely he doesn't.

By all means involve both the IRS and the MA AG's office. Just don't expect to see any criminal charges without a great deal of proof that he knew he had misclassified her and did it anyway.
 

eerelations

Senior Member
Its really important that misclassified workers start to seriously stick up for themselves and start reporting the employers who do this. The problem is becoming more and more rampant and employers won't stop doing it until they either get in trouble with the IRS and the DOL, or they start finding it impossible to find people who accept being misclassified.
A lot of misclassified workers don't know that misclassification is a bad/illegal thing. And a lot of other misclassified workers are happy being misclassified because they think they won't have to pay as much in taxes. Still others accept misclassification because it's either that or no job at all.

And the problem is not becoming more rampant, it's actually decreasing (just because you're hearing more about it here doesn't mean it's increasing, it just means workers are becoming knowledgeable enough about the practice to question their own situations). The IRS has made great strides in the last decade or two in forcing employers to reclassify their employees correctly (the mass reclassification at Microsoft was just the beginning of this trend). And as the US economy strengthens and unemployment rates go down, more and more workers have choices and can decline IC jobs knowing that won't take food our of their children's mouths.
 

LdiJ

Senior Member
A lot of misclassified workers don't know that misclassification is a bad/illegal thing. And a lot of other misclassified workers are happy being misclassified because they think they won't have to pay as much in taxes. Still others accept misclassification because it's either that or no job at all.

And the problem is not becoming more rampant, it's actually decreasing (just because you're hearing more about it here doesn't mean it's increasing, it just means workers are becoming knowledgeable enough about the practice to question their own situations). The IRS has made great strides in the last decade or two in forcing employers to reclassify their employees correctly (the mass reclassification at Microsoft was just the beginning of this trend). And as the US economy strengthens and unemployment rates go down, more and more workers have choices and can decline IC jobs knowing that won't take food our of their children's mouths.
As a tax professional I have to disagree with you. I have seen no signs of it subsiding yet, and signs of it increasing. I am not hearing more about it, I am seeing more people who are clearly employees getting 1099s from their employers instead of W2s. And I am fighting with more employer clients who are misclassifying their employees as independent contractors. I am making progress with some employer clients but its an uphill battle.

I understand that your perspective is different than mine, but I am in the trenches, and you are not.
 

eerelations

Senior Member
I understand that your perspective is different than mine, but I am in the trenches, and you are not.
How do you figure that? Like, what evidence or knowledge do you have that tells you I'm not in the trenches? Because, in fact, I am in the trenches! What do you think I've been doing the last 30 years? Answer here: getting paid large sums of money for educating US and Canadian executives on IC vs employee legal issues and managing large-scale (up to 500 misclassified workers in one go) IC-to-employee reclassifications is what I've been doing.

And regarding this being my "perspective" - I got said "perspective" straight from IRS and CRA (Canadian version of IRS) published statistics and related analyses. Your statement would be more accurate if you used the term "evidence" - because that's what I have, good solid hard evidence, not some little penny-ante POV.

So please, don't imply I don't know whatof I speak - I know more about this area of employment legal issues than most of this site's posters put together.
 

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