Uh what does this mean..
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@Dashrender said:
What would you call all the people who work for NTG? They are NTG employees, not employees of the businesses that contract with NTG.
Correct, because they are directed in their activities by @art_of_shred and none work only with a single client and none are full time on site with any single client and none are directed by the clients. They are not the norm in any way, which is working for a single client and directed by the client and only have their payroll come from the staffing firm. NTG is a consultancy, a real one, not a staffing firm.
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@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That's not enough info, but sounds like he would work for the client companies. There is an IRS checklist that lays it out. But pretty much where you work, how you split your time and who directs you determines for whom you work 95% of the time. It's only when those pieces are not all the same company that things get hard to determine, but as long as they are all the same company (and are typically the client company) then it is the client company that you work for (and the client company you have to sue for any lack of payment, for example, not the staffing firm.)
This isn't the official IRS checklist but is based on it taken from a site that I found quickly. But it should be enough to understand the logic. Basically it is a duck thing, if he acts like an employee - he's an employee. If he acts like a consultant, he's a consultant.
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What training the employer gives the worker. Independent contractors generally do not receive training from an employer.
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The extent to which the worker has business expenses that are not reimbursed. Independent contractors are more likely to have unreimbursed expenses.
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The extent of the worker's investment in the worker's own business. Independent contractors typically invest their own money in equipment or facilities.
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The extent to which the worker makes services available to other employers. Independent contractors are more likely to make their services available to other employers.
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How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job.
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The extent to which the worker can make a profit or incur a loss. An independent contractor can make a profit or loss, but an employee does not.
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Whether there are written contracts describing the relationship the parties intended to create. Independent contractors generally sign written contracts stating that they are independent contractors and setting forth the terms of their employment.
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Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
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The terms of the working relationship. An employee generally is employed at will (meaning the relationship can be terminated by either party at any time). An independent contractor is usually hired for a set period.
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Whether the worker's services are a key aspect of the company's regular business. If the services are necessary for regular business activity, it is more likely that the employer has the right to direct and control the worker's activities. The more control an employer exerts over a worker, the more likely it is that the worker will be considered an employee.
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What instructions the employer gives the worker about when, where, and how to work. The more specific the instructions and the more control exercised, the more likely the worker will be considered an employee.
This list is the one for determining 1099 vs employee status, but the topics are the same. Both come up constantly for IT workers.
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@scottalanmiller said:
- The extent to which the worker has business expenses that are not reimbursed. Independent contractors are more likely to have unreimbursed expenses.
I don't understand this one.
- The extent to which the worker makes services available to other employers. Independent contractors are more likely to make their services available to other employers.
Not according to Scott and the claim that many high level IT personal are actually contracted with firms, not employees because they don't show up as an expense and are less likely to be let go during staff reductions
- How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job.
What is usually? As a consultant/contractor I was primarily paid an hourly rate (but definitely not a wage)
- Whether there are written contracts describing the relationship the parties intended to create. Independent contractors generally sign written contracts stating that they are independent contractors and setting forth the terms of their employment.
In the aforementioned high level IT pros being contractors - I suppose they could have yearly contracts that need to be renewed, playing into this point.
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
- The terms of the working relationship. An employee generally is employed at will (meaning the relationship can be terminated by either party at any time). An independent contractor is usually hired for a set period.
Again with the IT Pros mentioned above, are those contracts at will, or more typically yearly or something less?
- Whether the worker's services are a key aspect of the company's regular business. If the services are necessary for regular business activity, it is more likely that the employer has the right to direct and control the worker's activities. The more control an employer exerts over a worker, the more likely it is that the worker will be considered an employee.
How would the contracted above listed IT Pros not be completely led by the 'employer?
- What instructions the employer gives the worker about when, where, and how to work. The more specific the instructions and the more control exercised, the more likely the worker will be considered an employee.
Same question as above.
This list is the one for determining 1099 vs employee status, but the topics are the same. Both come up constantly for IT workers.
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@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
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@IRJ said:
@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
And things just keep getting weirder.
So my employer, a medical office, considered laying off their entire workforce, and hiring a company that would employ the entire staff, and staff them back to my company.
The purpose for doing this was to reduce the cost of health insurance to the company.Medical offices pay very high medical insurance rates (I'm guessing numbers wise their employees use medical insurance more than the norm, so the rates reflect that).
The use of a staffing company is a loophole that could have been used to have the appearance that these employees worked for a non medical office, thus lowering the rates.
The staffing company is who would actually be providing all benefits, but of course all of those expenses would be passed back to the medical office.
Discuss.
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@Dashrender said:
@IRJ said:
@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
And things just keep getting weirder.
So my employer, a medical office, considered laying off their entire workforce, and hiring a company that would employ the entire staff, and staff them back to my company.
The purpose for doing this was to reduce the cost of health insurance to the company.Medical offices pay very high medical insurance rates (I'm guessing numbers wise their employees use medical insurance more than the norm, so the rates reflect that).
The use of a staffing company is a loophole that could have been used to have the appearance that these employees worked for a non medical office, thus lowering the rates.
The staffing company is who would actually be providing all benefits, but of course all of those expenses would be passed back to the medical office.
Discuss.
Capital does not like to be wasted. It's convoluted yes, but MUCH less so than the general day to day hoops tossed at medical offices in dealing with insurance companies and government reimbursement programs (where they actually get 25 to 50 cents on their billed dollars.)
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@travisdh1 said:
@Dashrender said:
@IRJ said:
@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
And things just keep getting weirder.
So my employer, a medical office, considered laying off their entire workforce, and hiring a company that would employ the entire staff, and staff them back to my company.
The purpose for doing this was to reduce the cost of health insurance to the company.Medical offices pay very high medical insurance rates (I'm guessing numbers wise their employees use medical insurance more than the norm, so the rates reflect that).
The use of a staffing company is a loophole that could have been used to have the appearance that these employees worked for a non medical office, thus lowering the rates.
The staffing company is who would actually be providing all benefits, but of course all of those expenses would be passed back to the medical office.
Discuss.
Capital does not like to be wasted. It's convoluted yes, but MUCH less so than the general day to day hoops tossed at medical offices in dealing with insurance companies and government reimbursement programs (where they actually get 25 to 50 cents on their billed dollars.)
The above situation actually has nothing to do with how the medical office gets paid, it was solely around the expenses that the office incurs.
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@Dashrender said:
- The extent to which the worker makes services available to other employers. Independent contractors are more likely to make their services available to other employers.
Not according to Scott and the claim that many high level IT personal are actually contracted with firms, not employees because they don't show up as an expense and are less likely to be let go during staff reductions
That's contracting in the way that most IT people use it, not legal contracting. Legal contracting, which we solely care about in this discussion, is how the IRS sees it. When I worked for the bank I was through a staffing firm so not put on the books. Yet I was a full employee of the bank legally.
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@IRJ said:
@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
that's what I had assumed. I have done this a lot, too. In this case, you are a very clear employee of COMPANY1 and the staffing firm is just a payroll service.
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@Dashrender said:
@IRJ said:
@Dashrender said:
I had a friend that worked a consulting company - that consulting company (for lack of a better term) rented out employees to other business for 6 month to 1 year contracts. Who does that employee work for? the consulting company or the renting company?
That is basically what I did. It is different than working for a MSP, because ALL your daily tasks come from COMPANY1. The staffing company just wrote the paychecks. COMPANY1 paid Staffing company and the Staffing company wrote a check to me for 70% or whatever they were paid and kept the 30%. (I am guessing on the numbers, but I would suppose it was something similar to that.). I never talked to the staffing company, my hours, tasks, and everything else about my job was approved by COMPANY1.
And things just keep getting weirder.
So my employer, a medical office, considered laying off their entire workforce, and hiring a company that would employ the entire staff, and staff them back to my company.
The purpose for doing this was to reduce the cost of health insurance to the company.Medical offices pay very high medical insurance rates (I'm guessing numbers wise their employees use medical insurance more than the norm, so the rates reflect that).
The use of a staffing company is a loophole that could have been used to have the appearance that these employees worked for a non medical office, thus lowering the rates.
The staffing company is who would actually be providing all benefits, but of course all of those expenses would be passed back to the medical office.
Discuss.
That would actually qualify as insurance fraud as the employees, when getting insurance, would have to state the medical office as the employer. Should anyone report it to the insurance company, it would be a major lawsuit. It's not a loophole, it's actually fraud.
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@Dashrender said:
The staffing company is who would actually be providing all benefits, but of course all of those expenses would be passed back to the medical office.
With the assumption that the staffing firm would collude with the medical office to claim to be the employer, which is false. This would require employment fraud to support the insurance fraud.
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@Dashrender said:
@scottalanmiller said:
- The extent to which the worker has business expenses that are not reimbursed. Independent contractors are more likely to have unreimbursed expenses.
I don't understand this one.
Employees get reimbursed for work expenses. A job cannot ask you to pay to work. But a contractor can be made to pay to work.
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@Dashrender said:
- How the business pays the worker. An employee is generally paid by the hour, week, or month. An independent contractor is usually paid by the job.
What is usually? As a consultant/contractor I was primarily paid an hourly rate (but definitely not a wage)
Usually always means more than 50% of the time.
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@Dashrender said:
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
These days they pretty much all do since it is a law in the US. All high end ones get benefits, I know hardly anyone outside of entry level that do not. But most contracting, at least traditionally, was people unable to find better work, so that entry level base is pretty large. I'd say most doing what you call contracting in the IT sense do not get benefits - from anywhere.
Remember like I said this list was from the 1099 vs W2 listing so that is where this applies. In my case as a contractor at the big bank, I got vacations from the bank and health from the staffing firm.
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@Dashrender said:
- The terms of the working relationship. An employee generally is employed at will (meaning the relationship can be terminated by either party at any time). An independent contractor is usually hired for a set period.
Again with the IT Pros mentioned above, are those contracts at will, or more typically yearly or something less?
All EMPLOYMENT is at will. If you work for the contracting firm OR the client, you are at will. It is when there is no employment at all that this comes into play. But the contract itself is not at will between the staffing firm and the customer.
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@Dashrender said:
- Whether the worker's services are a key aspect of the company's regular business. If the services are necessary for regular business activity, it is more likely that the employer has the right to direct and control the worker's activities. The more control an employer exerts over a worker, the more likely it is that the worker will be considered an employee.
How would the contracted above listed IT Pros not be completely led by the 'employer?
- What instructions the employer gives the worker about when, where, and how to work. The more specific the instructions and the more control exercised, the more likely the worker will be considered an employee.
Same question as above.
No serious IT firm lets the clients oversee consultants nor would any sensible firm hiring them do so as that would completely defeat the purpose of hiring them. You hire an MSP, for example, so that you get the management chain. For example, everyone at NTG is directed by @art_of_shred. If a client asks you to work and Art says you are off, you are off. Client has no input to you.
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@Dashrender said:
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
It depends on the contract. In this particular instance, yes. Sometimes in contracting you will get paid a significantly higher rate and not be given a choice for insurance. This is generally in 1099 situations. Most of the time as an employee you offered benefits, if it's a decent job that wants decent people.
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@IRJ said:
@Dashrender said:
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
It depends on the contract. In this particular instance, yes. Sometimes in contracting you will get paid a significantly higher rate and not be given a choice for insurance. This is generally in 1099 situations. Most of the time as an employee you offered benefits, if it's a decent job that wants decent people.
But 1099 is what is in the list above.... if you are directed by the "client" then the 1099 isn't valid and they have to provide insurance.
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@scottalanmiller said:
@IRJ said:
@Dashrender said:
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
It depends on the contract. In this particular instance, yes. Sometimes in contracting you will get paid a significantly higher rate and not be given a choice for insurance. This is generally in 1099 situations. Most of the time as an employee you offered benefits, if it's a decent job that wants decent people.
But 1099 is what is in the list above.... if you are directed by the "client" then the 1099 isn't valid and they have to provide insurance.
I don't believe they have to offer insurance, although most decent jobs that want decent people will.
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@IRJ said:
@scottalanmiller said:
@IRJ said:
@Dashrender said:
- Whether the business provides the worker with employee benefits, such as insurance, a pension plan, vacation pay, or sick pay. Independent contractors generally do not get benefits.
I consider this a biggie - I don't know of any contractors who get benefits from people they are doing jobs for. I wonder if the OP did?
It depends on the contract. In this particular instance, yes. Sometimes in contracting you will get paid a significantly higher rate and not be given a choice for insurance. This is generally in 1099 situations. Most of the time as an employee you offered benefits, if it's a decent job that wants decent people.
But 1099 is what is in the list above.... if you are directed by the "client" then the 1099 isn't valid and they have to provide insurance.
I don't believe they have to offer insurance, although most decent jobs that want decent people will.
No, they don't "have" to, but they get fined if they do not. No one "has to" do anything, if you consider legal penalties to be an "optional payment." But legally, they have to.
