Topic ID #36170 - posted 9/23/2015 4:40 PM

Question for Employers: 1099 vs Contract Temporary



spaten

The new ACA rules have made it difficult in all the construction related fields to hire long term temporary employees.

How open are companies to hire for long term projects on a 1099 basis? 

It seems like that is the direction that construction and environmental fields need to go to hire for long term projects.

IRS Website on:

Independent Contractor (Self-Employed) or Employee?

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee




Post ID#20714 - replied 10/27/2015 6:08 PM



Me_at_Home

It is illegal to hire field archaeologists as independent contractors.  This is nearly universally bad for the employee.  I know of a (very) few instances where this worked out well for the employee, but it is extremely rare. 

Post ID#20715 - replied 10/28/2015 10:02 AM



Deptford

It is not illegal to use independent contractors for fieldwork however, independent contractors can not be treated as employees, which means essentially they agree to accomplish a certain task for a certain amount of money within a certain amount of time.  

You can make more money working as an independent contractor if you're willing to put enough money aside to contribute to a traditional IRA (individual retirement account)  and / or an HSA (health savings account). The key is to contribute enough money  to reduce your annual taxable income to the level where you get a tax refund instead of having to pay taxes. Also the money you contribute to those accounts can earn compound interest or dividends. For a single person the maximum contribution for an IRA is around $5000 and $3500 for an HSA. 

Also anyone accepting work as an independent contractor should be aware that social security and medicare taxes are not withheld. If you don't have a tax shelter (i.e. HSA or IRA) and your annual income reaches a certain level you will be responsible for paying those taxes at the end of the year. Thus, you should set aside up to 30% of the income you earn as an independent contractor to pay those taxes at the end of the year. So if you're offered work as an independent contractor be ready to negotiate the pay rate - using an hourly or daily rate as a benchmark.

Salary.com uses an adjustment factor of 30 percent to convert an hourly wage for a salaried employee to an hourly wage for a contract employee. Multiply your unadjusted hourly rate by (1.3) to get your adjusted hourly rate. For example, if your unadjusted hourly rate comes out to $14 per hour, your contract rate should be $18.2 




Post ID#20718 - replied 10/30/2015 10:10 AM



Me_at_Home

You are wrong. While there may be conditions where a field archaeologist preforms their work in the manner of an independent contractor, these are so extremely scarce as to be almost not worth talking about. The vast, vast, vast majority of jobs that field archaeologists are hired for, clearly, without a doubt, fall under the category of Employee. It is illegal to categorize a worker as an independent contractor when they are an employee.

Some of the criteria that are used to distinguish independent contractors from employees could go either way for field archaeologists, but in aggregate, they unambiguously fall into the Employee category. Field archaeologists almost always work under the direct supervision of another, they are not in charge of deciding how the work is completed, and they do not set their schedules. They do not decide when and where they work. They do not hire assistants. While they may supply some personal equipment, they are generally not required to provide and purchase supplies. They are usually directed in how to do all aspects of their work.

If a field archaeologist is hired to work on a project doing pedestrian survey, shovel probe survey, evaluative test excavations, data recovery excavation or laboratory work then it is nearly impossible that they could be independent contractor because they are not independent. Their actions are directed. They are employees.

It has nothing to do with signing a contract.

It has nothing to do with a specific task.

It is not the workers decision. It is a decision based principally on the behavior of the worker and how that work is controlled.

Field archaeologists:  I am not saying never enter into one of these agreements or that there is no instance where you may, in fact, be a true independent contractor. But the conditions in which they are truly beneficial to you are rare, rare, rare. Be very, very cautious of entering into an independent contractor relationship with a CRM company or government agency. Companies/agencies do this so that they are not responsible for payroll taxes and other employee-related costs and tasks. Remember, these costs do not only included payroll taxes, but the in-house cost for bookkeeping and reporting this information. Reputable companies/agencies do not hire field archaeologists as independent contractors.  

Post ID#20719 - replied 10/31/2015 8:23 AM



archeobot

There is a company in Maryland that does business with the State Highways which almost everyone except possibly two personnel are independent contractors. This includes the field directors and lab directors, so it does happen.

I, personally, would never agree to this. If you are hired as an independent contractor/1099 and you get hurt on the job, you do not get workman compensation and your injuries/expenses come out of your own pocket. You also can not collect unemployment if you get laid off. As a contract employee you can not get time and half for over time. There are many reasons why this is not beneficial for the worker, but would absolutely benefit the employer. 

Post ID#20720 - replied 10/31/2015 4:30 PM



gmeier

I would rather be an employee vs a contractor any day if the company doesn’t pony up what it actually costs to be an independent contractor. 

Say you think your skills are worth $20 an hour plus benefits which is very low as a Field Archaeologist. 

Then as a contractor you would need $20 an hour, plus FICA of 15.3 percent, plus 10 percent to buy health insurance, another 10 percent for overhead or maybe put in IRA so you would want $27.06 an hour minimum.  Plus as a contractor you will need to be rein-busted on POV mileage, motels stays away from where you live and per-diem at a decent rate. 

What people forget when they are self-employed is the IRS wants their FICA (Social Security plus Medicare) taxes quarterly throughout the year.  You don’t get to pay these taxes on April 15th like a employee does (but the full amount that the employer would pay and you usually its 50/50) because you are considered a business so if you make $40,000 per year but $10,000 every three month you would have to write the US treasury a check for these taxes of $1,530.00 on March 30th, June 30th, September 30th, and December 30th.  Then on April 15th you will have to do the long form file your taxes and try to get a refund or maybe find out you owe some more taxes to the states you worked in.  If you miss by not paying enough each quarter on the federal return then on April 15th you will get a penalty as well.  Its fun to pay taxes a do creative ways to take write-offs.

If you contract out figure out what your skills are worth off the GSA wage list for an archaeologist and be smart. https://www.gsaadvantage.gov/ref_text/GS10F0224P/GS10F0224P_online.htm

Most companies you work for that is how they value your skills and make $$$ money when they hire you at $15 per hour and send you out on a project for a client.  Below is how much a skill is worth at one CRM firm off the GSA wage list web site.  Even these rates are low might be an old list.

    Project Administrator – $80.76/hour

    Principal Investigator – $80.76/hour

    Project Director – $56.27/hour

    Project Archaeologist – $52.60/hour

    Asst. Crew Supervisor – $42.32/hour

    Field/Lab Archaeologist – $40.18/hour

    Laboratory Supervisor – $52.60/hour

    Asst. Lab Supervisor – $42.32/hour

    GIS/Graphics Director – $52.54/hour

    GIS/Graphics Specialist – $43.20/hour

    Office Manager – $48.14/hour

    Production (Office) Assistant – $31.20/hour

    Copy Editor – $48.01/hour

Post ID#20723 - replied 11/12/2015 1:18 PM



Me_at_Home

I followed this discussion and the responses. I also discussed the matter with several field techs currently working for me. I want to reiterate several points and make a few things clear. 

1.       Yes, field archaeologists are hired as independent contractors. It does happen. This does not make it legal or right.  

2.       Hiring field archaeologists as independent contractors is illegal, because it is nearly always an intentional miss categorization of the worker and what that worker is doing. The employer knows what they are doing and they are knowingly breaking the law.

3.       An independent contractor does not enjoy the same labor protections as an employee and is not covered by unemployment insurance.   

4.       Moreover, companies that do this are putting the worker and themselves at risk. This is because worker comp insurance is, in part, insurance protection for the employer as well as the employee. If the employer is sleazy enough to avoid workers comp then it is highly likely they are avoiding the other types of insurance they would need to cover independent contractors in case of injury.

5.       It is nearly impossible that a field archaeologist is actually preforming a task in the manner of an independent contractor if they are doing any type of survey, monitoring, excavation or lab work.  Nearly impossible. 

6.       It is a (one among many) sleazy way to treat field archaeologist.

If you have been hired as an independent contractor or you know a company that does this, I urge you to report the company or government agency. You can google it, talk to an attorney or start with the link below for help. Or call your state department of labor or state department of revenue.    

http://dpeaflcio.org/wp-content/uploads/State-Resources-for-Misclassified-Workers-September-2014.pdf

I will say this again:

Reputable companies and government agencies do NOT hire field archeologists are independent contractors. 

Post ID#20724 - replied 11/12/2015 4:27 PM



Deptford

If you're interested in facts then you should discus the matter with an accountant or an attorney

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