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I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding

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  • 12-23-2009, 02:10 PM
    Shady136
    Is My Independent Contractor Agreement Binding if Not Independent Contractor
    My question involves independent contractors in the state of: WA and OR
    Hi, I recently was hired by a man who represented himself to own a business based in WA state. He required me to sign an independent contractor agreement. Later I discovered that all the work I did for this man was probably illegal. His business was not registered to do business in WA. It was registered in OR however. We did no work in OR and two different jobs in WA. Based upon OR, WA and federal guidelines I think I can determine that the nature of my work was as an employee and not an independent contractor. The "boss" even said as much the day I signed the agreement - that we were going to be treated as employees and the I.C. agreement was to make tax time easier for all of us. I began to suspect this guy was not on the up-and-up and did some checking. I have found enough information and I am not going to work for this guy ever again. However, during the course of my employment we did two jobs which did not earn his company repeat business. Part of the fault may lie in his dishonest actions with the customer and part may lie on the side of myself and my supervisor. I have documentation to prove his partial fault. He is claiming that this "loss" of repeat business counts as a loss of revenue and is enforceable by an indemnity clause within my I.C. agreement. We caused no damage and did nothing beyond the work he showed us to do. They simply don't want us back. Now that it has come time to pay he has told me he will not pay and is perhaps considering sueing to recoup said "loss" (a crazy $118,000 considering both jobs total approx. $13000 in total revenue for him).

    But I am wondering if the I.C. agreement is even binding since it can clearly be determined I was an employee and NOT and I.C.? I did sign it...at the time I trusted the guy. That is my fault. Now I need to know if this agreement will still be considered binding. I would appreciate any thoughts on the matter and am happy to provide points of clarity if needed.
  • 12-24-2009, 11:28 AM
    Mr. Knowitall
    Re: Is My Independent Contractor Agreement Binding if Not Independent Contractor
    Make a wage complaint with the appropriate agency for whatever state you were in when you performed the work.
  • 12-24-2009, 01:47 PM
    Shady136
    Re: Is My Independent Contractor Agreement Binding if Not Independent Contractor
    Thanks Knowitall. Will the state agency (I am thinking the Department of Revenue might be the correct agency? Or would it be the Department of Licensing?) be able to determine the nature of my contract? Or will they simply settle the matter of witheld wages/bonus? To be honest, I am more worried about the threat to recover "lost" revenue.
  • 12-25-2009, 05:49 PM
    Shady136
    I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    I posted this in another section of these forums, but perhaps someone who browses this subtopic will have some advice:

    My question involves independent contractors in the state of:WA and OR
    I recently was hired by a man who represented himself to own a business based in WA state. He required me to sign an independent contractor agreement. Later I discovered that all the work I did for this man was probably illegal. His business was not registered to do business in WA. It was registered in OR however. We did no work in OR and two different jobs in WA. Based upon OR, WA and federal guidelines I think I can determine that the nature of my work was as an employee and not an independent contractor. The "boss" even said as much the day I signed the agreement - that we were going to be treated as employees and the I.C. agreement was to make tax time easier for all of us. I began to suspect this guy was not on the up-and-up and did some checking. I have found enough information and I am not going to work for this guy ever again. However, during the course of my employment we did two jobs which did not earn his company repeat business. Part of the fault may lie in his dishonest actions with the customer and part may lie on the side of myself and my supervisor. I have documentation to prove his partial fault. He is claiming that this "loss" of repeat business counts as a loss of revenue and is enforceable by an indemnity clause within my I.C. agreement. We caused no damage and did nothing beyond the work he showed us to do. They simply don't want us back. Now that it has come time to pay he has told me he will not pay and is perhaps considering sueing to recoup said "loss" (a crazy $118,000 considering both jobs total approx. $13000 in total revenue for him).

    But I am wondering if the I.C. agreement is even binding since it can clearly be determined I was an employee and NOT and I.C.? I did sign it...at the time I trusted the guy. That is my fault. Now I need to know if this agreement will still be considered binding. I would appreciate any thoughts on the matter and am happy to provide points of clarity if needed.
  • 12-25-2009, 09:05 PM
    mmmagique
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    IRS.gov has a list of things that can help you prove whether you were or were not an IC.

    I too signed such an agreement years ago, but was actually an employee. The agreement means nothing when the employer is breaking the law.
  • 12-26-2009, 06:47 PM
    Shady136
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    Thanks. Based on these guidelines I can determine without a doubt that I was an employee and not an IC. Is it considered breaking the law if the company regards and treats us as IC's including the IC agreement? Or were you just referring to the lack of licensing in the states I was working in?
  • 12-27-2009, 12:33 AM
    mmmagique
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    Yes, it is illegal to treat employees as IC's.

    What happened to me was (I was in my early 20's and a bit naive) the employer had me sign an IC agreement, but I worked as an employee. A year or two after my employment had ended, the IRS came after me for taxes they claimed I owed because the employer had not taken any taxes out, and I hadn't done so either.

    I had to fill out a lot of paper work describing the work I performed, etc. and the result was my former employer had to pay taxes that he hadn't taken out on me, plus a lot of other people.

    Good times! :D
  • 12-27-2009, 04:27 AM
    KeyWestDan
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    There are 12 different factors that the IRS looks at to determine if someone is an independent contractor. If the employer treats you as an employee, sets your hours, what time you start, what your duties are, etc. then you are an employee regardless of any civil contract.

    He would have no grounds to sue you, that is a bluff. Anyone can pay the filing fee and file a civil action but he would lose in a heartbeat. In addition, he would not be able to sue you personally, the business would have to sue, and that business doesn't even legally exist in your state, so it would have no standing. It was also conducting business illegally in your state and no contract you signed is legally enforceable anyway.

    I would report him to the secretary of state, state taxation, state employment agencies, etc. I would also report him to the IRS for failure to withhold and pay taxes, and failure to pay federal FICA. You can get a reward from the IRS too. If a corporation fails to pay FICA, the officers and board members are personally responsible for paying it.

    He has probably done this alot, so there is likely a long line of employees screwed over and lots of money owed.
  • 12-27-2009, 04:21 PM
    Shady136
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    Sorry to hear about your past troubles! Perhaps it would be comforting to know that the knowledge gained for your troubles is helping me sleep tonight ;)
  • 12-27-2009, 04:39 PM
    mmmagique
    Re: I Was Not an Independent Contractor but Signed and I.C. Agreement - Is It Binding
    :) Of course! (it also made me happy that someone who tried to take advantage of others had it come back to bite him in the behind!)
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