Submitted by Jesse Russell on April 15, 2010 - 8:54am
Millions of workers in America are being mis-classified by their employers as independent contractors. The Department of Labor estimates as many as 30 percent of companies are mis-classifying workers. Chris Sloan is Government Affairs Director for the International Union of Painters and Allied Trades.
Chris Sloan: “An employer who is looking to evade paying the proper taxes in terms of social security, unemployment insurance, worker’s compensation and other payroll taxes will mis-classify or re-classify their employees as independent contractors.”
Sloan says it’s a huge problem – particularly in the construction trades - that cheats both workers and taxpayers.
Chris Sloan: “In construction, over 20 percent of the construction workforce was being mis-classified. It's a huge problem in terms of how workers are being treated on the job site, whether they are able to provide for their families and whether or not state and local governments that are going through huge budgetary constraints now are able to pay for services like hospitals and schools for our kids."
The Obama administration is cracking down on the problem, adding a hundred new enforcement officers. Legislation is also being introduced in Congress to prevent the mis-classification of employees.
Rightardia has written about this problem before. Many small businesses try to classify workers as managers who are exempt form wage and hour laws that address overtime. Check out this link which explains the differences between exempt and non-exempt employees: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P05_4037
The minimum salary level to qualify for exemption from the overtime requirements as an executive, administrative, professional or computer employee is $455 per week or $23,660 annually. If you are paid less than that you should be paid overtime. Watch out for employers who tell you that you are on salary but make you fill out a time card.
The Department of Labor will also go after companies that are hiring employees as independent contractors. As an independent contractor, you pay you own Social security, FICA payroll tax and Income Tax.
This not as easy as it might seem and many independent contractors have developed huge tax problems with the IRS. In fact, the man in Texas who flew his aircraft into an IRS building got into tax problems with the IRS as an independent contractor.
Although most computer people are classified as exempt employees, one company in the Tampa Bay area, Knight Enterprises, uses IT people as independent contractors to provide cable modem, wireless, and VoIP telephone support.
Wirehead, out IT writer, was contacted by this company about five years ago. They wanted him to come to work and train with them for a week with no pay. He would also have to use to his own vehicle and tools. In addition, Wirehead's stepson inquired about a job with the same company and they advised him that if he was late to a job he would be fined. Wirehead told the Knight HR person to 'stuff it."
When Wirehead switched his cable provider to a different, company, he ran into an excellent tech who had worked for the cable company before they dropped their field technical services and contracted their work out to Knight. The young man had an Associate Degree in IT and was rehired by Knight as an independent contractor. Who was the big loser in this corporate downsizing? Clearly the worker.
Rightardia does not understand why highly trained IT people, who have certifications, would have to work as an independent contractor.
There is a lawsuit against Knight Enterprises Inc., a Clearwater firm that provides independent contractors for the cable company's installation services. The plaintiffs in the case want a class action and reclassification of independent contractors as employees, which they estimate at 300 to 500 people.
A spokesman for Bright House, said the company declined to comment at this time because of the pending litigation.
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Millions of workers in America are being mis-classified by their employers as independent contractors. The Department of Labor estimates as many as 30 percent of companies are mis-classifying workers. Chris Sloan is Government Affairs Director for the International Union of Painters and Allied Trades.
Chris Sloan: “An employer who is looking to evade paying the proper taxes in terms of social security, unemployment insurance, worker’s compensation and other payroll taxes will mis-classify or re-classify their employees as independent contractors.”
Sloan says it’s a huge problem – particularly in the construction trades - that cheats both workers and taxpayers.
Chris Sloan: “In construction, over 20 percent of the construction workforce was being mis-classified. It's a huge problem in terms of how workers are being treated on the job site, whether they are able to provide for their families and whether or not state and local governments that are going through huge budgetary constraints now are able to pay for services like hospitals and schools for our kids."
The Obama administration is cracking down on the problem, adding a hundred new enforcement officers. Legislation is also being introduced in Congress to prevent the mis-classification of employees.
Rightardia has written about this problem before. Many small businesses try to classify workers as managers who are exempt form wage and hour laws that address overtime. Check out this link which explains the differences between exempt and non-exempt employees: http://www.toolkit.com/small_business_guide/sbg.aspx?nid=P05_4037
The minimum salary level to qualify for exemption from the overtime requirements as an executive, administrative, professional or computer employee is $455 per week or $23,660 annually. If you are paid less than that you should be paid overtime. Watch out for employers who tell you that you are on salary but make you fill out a time card.
The Department of Labor will also go after companies that are hiring employees as independent contractors. As an independent contractor, you pay you own Social security, FICA payroll tax and Income Tax.
This not as easy as it might seem and many independent contractors have developed huge tax problems with the IRS. In fact, the man in Texas who flew his aircraft into an IRS building got into tax problems with the IRS as an independent contractor.
Although most computer people are classified as exempt employees, one company in the Tampa Bay area, Knight Enterprises, uses IT people as independent contractors to provide cable modem, wireless, and VoIP telephone support.
Wirehead, out IT writer, was contacted by this company about five years ago. They wanted him to come to work and train with them for a week with no pay. He would also have to use to his own vehicle and tools. In addition, Wirehead's stepson inquired about a job with the same company and they advised him that if he was late to a job he would be fined. Wirehead told the Knight HR person to 'stuff it."
When Wirehead switched his cable provider to a different, company, he ran into an excellent tech who had worked for the cable company before they dropped their field technical services and contracted their work out to Knight. The young man had an Associate Degree in IT and was rehired by Knight as an independent contractor. Who was the big loser in this corporate downsizing? Clearly the worker.
Rightardia does not understand why highly trained IT people, who have certifications, would have to work as an independent contractor.
There is a lawsuit against Knight Enterprises Inc., a Clearwater firm that provides independent contractors for the cable company's installation services. The plaintiffs in the case want a class action and reclassification of independent contractors as employees, which they estimate at 300 to 500 people.
A spokesman for Bright House, said the company declined to comment at this time because of the pending litigation.
Subscribe to the Rightardia feed: feeds.feedburner.com/blogspot/IGiu
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