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  1. #1
    Join Date
    Nov 2016
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    1

    Default Misclassification of Commission-Based Workers as Independent Contractors

    My question involves independent contractors in the state of: Georgia.

    OK here goes. I've worked at my job for a while now and here is the rundown. All employees are hired as IC's. We work for a business and are paid commission only. We can only work during set hours and can't leave when we want. No benefits. No taxes taken out. Sometimes we work for free, no sales = no money. Boss flips out and guilt trips people if we take one of our set work days off.

    I'm looking for a new job and not the type to cry foul, but I want to know if what I've been putting up with over the years is legal. And do I have a leg to stand on.

    Thanks for listening to my newbie rant. Apologies if I posted in the wrong place. - Nik

  2. #2
    Join Date
    Mar 2013
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    17,495

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    I want to know if what I've been putting up with over the years is legal
    Misclassifying an employee as an IC is illegal. It breaks IRS tax laws as well as state workers comp, UI, and wage laws.

    To make sure you have been illegally misclassified, go to the IRS website and study up:

    https://www.irs.gov/businesses/small...ed-or-employee

    Now read the following article:

    http://hr.blr.com/HR-news/Compensati...wn-contracto/#

    And here's contact information for the GA DOL:

    http://dol.georgia.gov/gdol-service-directory

    do I have a leg to stand on.
    For what?

    Do you want money?

    Do you want to just bring smoke down on the company?

    Either way, you can file complaints with the IRS and the GA DOL. You either "cry foul" or you get over it and move on.

  3. #3
    Join Date
    Oct 2006
    Posts
    15,934

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Personally, I think that you should "cry foul". Unless people make complaints and bring the wrath of the IRS and the DOL down on companies who do that, the practice is going to continue...and employees are going to continue to be cheated.

    One relatively passive way to do it is to file form SS-8 with the IRS and then use form 8919 (instead of schedule C) when filing your taxes. That gets you out of paying the employers share of social security and medicare taxes, and causes an investigation by the IRS.

  4. #4
    Join Date
    Feb 2008
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    1,151

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Agree with the others, but there is definitely not enough information provided to say for sure that you should have been classified as an employee. Many times ees are misclassified as ICs but not always. Is there any written agreement that was made between you and this company? Working set hours isn't going to automatically put you in the employee category. It is more a series of questions where you have to look at the overall picture. There is no bold black line.

    What kind of sales do you do? You might also look into the "outside sales exemption" under FMLA to see if you would qualify under that. If you did, while you would be an employee and the employer would owe payroll taxes, those employees could be exempt from minimum wage/OT. So there is more than one layer to your question.

  5. #5
    Join Date
    Oct 2006
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    15,934

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Quote Quoting hr for me
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    Agree with the others, but there is definitely not enough information provided to say for sure that you should have been classified as an employee. Many times ees are misclassified as ICs but not always. Is there any written agreement that was made between you and this company? Working set hours isn't going to automatically put you in the employee category. It is more a series of questions where you have to look at the overall picture. There is no bold black line.

    What kind of sales do you do? You might also look into the "outside sales exemption" under FMLA to see if you would qualify under that. If you did, while you would be an employee and the employer would owe payroll taxes, those employees could be exempt from minimum wage/OT. So there is more than one layer to your question.
    While you make a valid point, I think its pretty clear to me that the employer is misclassifying employees as ICs. The workers clearly have no control of the situation at all, and that is a major element.

  6. #6
    Join Date
    Dec 2009
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    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    "...we...can't leave when we want." Doesn't sound like outside sales to me, sounds like they're required to be in some sort of workplace. Even more reason to believe they're probably employees.

  7. #7
    Join Date
    Aug 2013
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    284

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Agreed we are likely talking about workers who are legally employees. However, you always want to know the industry and the exact nature of the work being done. There is always the possibility of statutory non-employees or other oddball exceptions.

  8. #8
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    Oct 2006
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    15,934

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Quote Quoting DAWW
    View Post
    Agreed we are likely talking about workers who are legally employees. However, you always want to know the industry and the exact nature of the work being done. There is always the possibility of statutory non-employees or other oddball exceptions.
    Its inside sales. I cannot think of any industry where inside sales people are traditionally or statutorily independent contractors. However, that is the entire purpose of form SS-8. You fill it out, give the IRS all of the information, and the IRS decides whether you are an employee or an independent contractor.

  9. #9
    Join Date
    Aug 2013
    Posts
    284

    Default Re: Misclassification of Commission-Based Workers as Independent Contractors

    Agreed. And there are a whole of administrative decisions and court cases regarding inside sales in recent years, all of which say the worker is not only an employee but is non-exempt. And that "phone sales", "internet sales" and any other sales done from an office are "inside sales". Very black letter law. Worker classification regarding these types of workers should also be black letter law. A single employer/client exercising direct broad control and the worker solely/primarily engaged by that party. That leaves little or no room to argue Independent Contractor.

    However, it is still good to know exactly what is being sold to make sure that an attempt is not going to be to claim one of the statutory exceptions, such as the following.

    Statutory Nonemployees


    There are three categories of statutory nonemployees: direct sellers, licensed real estate agents and certain companion sitters. Direct sellers and licensed real estate agents are treated as self-employed for all Federal tax purposes, including income and employment taxes, if:

    Substantially all payments for their services as direct sellers or real estate agents are directly related to sales or other output, rather than to the number of hours worked, and
    Their services are performed under a written contract providing that they will not be treated as employees for Federal tax purposes.

    Companion sitters who are not employees of a companion sitting placement service are generally treated as self-employed for all federal tax purposes.

    Refer to information on Statutory Nonemployees located in Publication 15-A, Employer's Supplemental Tax Guide (PDF) for additional information.

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