Worker classification issue
- Michelle Wood: SWCD
- October 22, 2009
- 846
Signed, Reluctant
Self-employed
This question goes back many years and is hotly contested by companies and their personnel. The answer to the question of how a person in your situation is properly classified is based upon the amount of control that the company has over the person.
The more control that a company has over the person, the more the person takes on the nature of an employee. Such factors as when the employee works and how they perform their duties are crucial.
If the company establishes your work hours and tells you how you will do your job, then that would be evidence that they control your work environment and work content.
These situations are clearly employer/employee situations. The more control the company has, the more your case for being classified as an employee.
In your situation, the company apparently tells you what days and what hours to work. They supply you with a vehicle and tell you where to go and what to deliver.
In my opinion, and based upon the facts that you have provided, I believe that the company would have a difficult time defending their position that you are anything but an employee. They clearly control your work environment.
Your second question is more difficult: how do you get them to change your classification?
Let me explain why that is more difficult. As a self-employed person, you are responsible for your own Social Security and Medicare taxes. You are not eligible for state or federal unemployment taxes and are not covered by workers' compensation.
All of these are requirements of an employer to pay for all their employees. If they were to classify you as an employee, they would have to pay all the above taxes.
You can see where they have a big advantage treating you as a self-employed person. The tax liabilities could easily amount to 15 percent.
I think you are clearly an employee. But getting them to clearly classify you as such could be difficult at best. Perhaps showing them this column might be a good place to start.
Be aware though, that it might cost you your part-time income if the company chooses to ignore the facts.
Bill Weber, CPA has been advising businesses for more than 30 years. He has served in leadership with Crown Financial Ministries and is a church co-coordinator for Financial Peace University.
E-mail questions and comments to financialmat ters11@gmail.com.
The opinions expressed in this column are mine, alone. The Bargain Hunter, their editors and advertisers do not condone, endorse or share my opinion. They are way too smart for that.