Quote:I'm aware, and its totally shady! I had a client, this poor lady... she was working for a hotel as a maid, and they were 1099'ing her.
We filed an ss8 with the irs to get a opinion on it, of course they reclassified her as an employee right away. And this hotel not some run down motel 8... corporations will do anything to hose workers... but that's another topic...
I honestly think independent contractors in the construction business are not really employees... but to be honest, it's really a discussion that needs to be had between the general and the sun contractors.
In New Mexico's construction industry, it's understood that you're gonna be 1099'd fur the job your hired to do...
Different states may have different standards...
Other than my time in the Navy, I have been in some form of construction or another, so I might be able to help you understand...
It used to be that General Contractors did everything themselves with their own crews, but through the years it's trickled down to where they hire all sub contractors and the GC simply runs the jobs, and is actually nothing more than the admin part...The reason is simple...They do less and make more money, or keep more money because they only have one or two actual workers on job sites plus the GC himself, and the sub contractors...The GC doesn't pay the sub contractors crews, pay their liability insurance, WC or have to provide benefits for their employees...The subs bid on the job(s) and if they win, they get a percentage of the total payout of the bid at certain stages of the build...Subs do everything now, all the concrete work, electrical, plumbing, HVAC, roofers, framers, et.al are all sub contractors...
Now here's the part about employee vs independent contractor...An independent contractor must have his own WC, liability insurance, business licence, EIN, and pay any person working for him along with all other regulations of owning a business...If you do not have all of the requirements of a business owner, you can't be an independent contractor...An independent contractor is legally self employed which means he is a business and must have all the credentials of a business and file taxes as a self employed person...
An employee receives a set amount of pay per hour/week, and generally has some sort of benefit(s) drives or rides in a company or owner operator contractor's vehicle, uses company tools ( most companies furnish the big expensive tools which are generally ones that have to be plugged in while the employee must furnish his own general hand tools)
Years ago 1099 was so popular for contractors claiming to have hired independent contractors, but very few of them filed taxes...The IRS changed the definition of an independent contractor to include being self employed, having a business license, EIN, WC and all other insurances among other things...
Employers loved the old rules because they didn't have to provide benefits to independent contractors, nor worry about tax obligations for them...Not so simple to just 1099 someone anymore...
Oh one other thing that just hit me about independent contractors...They always work by contract, if there is no contract, you certainly are not a contractor of any kind
