Determining Independant Contractor v Employee Status

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Permalink Reply by ASL4U on February 23, 2008 at 5:05am

Basically - according to the IRS - ALL interpreters are... should be... "employees"... (when working for a referral agency) and assigned as "part time hourly" and treated in the same way that hourly temporary workers are treated. It is the interpreters who want to maintain autonomy - and for variety of reasons. The biggest reasons for me are:
If you make me sign a W2 - you have given me "a job".. when I go to make a big purchase - specifically like when trying to buy a house - the bank will give preference for my "real" income over my "maybe it'll come - maybe it wont" income, otherwise known as ad hoc - or freelance.
In my case, the first time I tried to buy a house, I had a job providing "freelance" services to a university that had me on a W2 - I earned from that school - around $ 15,000 per year... my freelance income was up around 25K... I figured with 40K income, I should've been able to buy a house - but what happened was the bank told me that I did not make enough - period. They would only consider my "real" income, $15K as my "actual" total income, OR they would consider my "freelance" income $25K as "POSSIBLE" TOTAL income (with the understanding that their preference would be the W2 income because it was more stable (???)... but they absolutely would not consider both.
So I avoid contracts that pay me with W2 if at all possible - because I dont want my financial values to be split.
I own my house now... I bought it with no income verification - and in so doing, I avoided the problem of which income is which. That was a pretty easy trick in the last couple years - but the banks are getting fussy again because all these people (WITH W2 jobs) over purchased themselves and are now losing their houses.
The biggest piece that causes us to be "part time hourly - Employees" according to the IRS - is that we are told what time to start the job.
"Real" contractors are hired on a "per job" basis - and are not told when to start (they say they'll start on Monday - never get around to it until Tuesday - should be finished by Friday next week - but then get sidetracked and its suddenly 3 months later and still not complete. And this is all "non-employee" goodness.
Interpreters are hired on a "per job" basis - but we are told when we start and when we stop (billing)... (and the "when we stop" is how we have successfully maintained freelance status for all these years). By IRS standards - as soon as we are told (by an referral agency) what time to be there - our behavior is being dictated and we are on the line if not fully across it, with regards to being called employees. When that agency also presumes to tell us how to dress, that we must arrive 15 minutes early, that we should prepare for the assignment (on our own time) and supplies us with tracts and agendas, provides the interpreter with a "Policies and Conduct Handbook" that describes the behaviors and "rules" by which you will "represent" that agency - all of that "here, let me show you how WE want you to do YOUR job..." makes that person an employee (according to the IRS... and subconsciously according to the interpreter and the agency as well). Rules - are a form of behavior managment - and it is very difficult for us (and if we are socially responsible, almost impossible for us - to ignore). Once we have "assigned" ourselves "employee" status - regardless of how we are paid - we BEHAVE as employees... this makes it easy for the agency to use us as they wish, treat us with the same expectations they have for employees and profit greatly through avoiding paying your taxes as an employee. And we dont fight it, because we believe we are independent. (and you know - all those "policies" those are just "good professional dictates"... "I would expect that of myself anyway"... ahhh - and those socially defined precepts (for the purpose of maintain order in employment) are what make us good and compliant "employees"...)
I maintain good records. Make sure I work for a variety of agencies and my own independent contracts, and am prepared - if I were to be audited, to defend my right to be considered freelance...(have been - and have) despite the fact that it means I pay much more in taxes than, technically I should have to.
What I'm fighting for is autonomy. The ability to manage the amount of work I'm doing and what kind, the ability to take a week off if I need to - without the need to ask permission, and the ability to take a job on one day - and if something happens where that job is not going to happen, I get paid - and I go home (or take another job - and can expect to be paid for it)...
Employees - if the job cancels - can be (and often are) sent to another job but their pay is for the hours they are available - not per job... So the second job is not paid separately from the first, and in many cases they cannot say no (even if they say the "no" is because they do not feel qualified).
For me - I'll stay independent for as long as I can. Sometimes, there are moments when I wonder about the reliability of income that I imagine "employed" interpreters earn - but in most cases, I'd rather starve than be "directed" in someone else's best interest.

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Permalink Reply by Roberto Santiago on May 7, 2008 at 4:47pm

Well put "ASL4U" whoever you are. I would also advocate for the W9 route when employing independent sub-contractors (AKA "freelancers"). The reason is similar to "ASL4U." Buying a home is a big dream for many people and in my experience it's easier to get a loan if you don't have mixed W2 and W9 income. If I were to sign on with a place that wanted to consider me an employee I would expect more from the company than I would as an ISC. If I were a freelancer I'd rather stay all W9.

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Permalink Reply by Daryl G Crouse on May 14, 2008 at 10:42pm

I found this website with a great synopsis of the IRS test:

http://www.mbopartners.com/learning/compliance/contractors/amicompl...

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