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  1. #21
    Join Date
    Oct 2006
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    15,679

    Default Re: Subcontracting

    Quote Quoting budwad
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    You go to the local mattress store to buy a new mattress. You sign a contract for the purchase. The store has an IC that delivers mattresses for them. Now you are saying that because you signed a contract to purchase from the store that the delivery company is a subcontractor? That is incorrect.
    That is not even remotely the same thing.



    I'm not impressed with your swelled head about your expertise. And of course, you could never be incorrect. I get that. But we are not talking about an employee being misclassified as an IC. We are talking about the difference between a subcontractor and an independent contractor. So you can argue a point that we are not even discussing if you like to revel in your own ego.

    You like to post without any (ever) law to back up what you say. We are just obliged to accept what you post. You may be correct that you know at least more that 90% of the regular responders here. But I am among the 10% that are more knowledgeable on the subject of what an IC is than you.
    You need to just admit that you got it wrong this time.

  2. #22
    Join Date
    Oct 2019
    Posts
    11

    Default Re: Subcontracting

    Geez, this thread went out of control.

    This question im about to ask may also spark another debate.

    According to California's ( I pay attention to California laws as they tend to set the precedent for most states) new pending independant contractor laws (which are likely to pass), state these IC Regulations:

    - The IC must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work

    - The IC performs work that is outside the usual course of the hiring entity’s business

    - The IC is customarily engaged in an independently established trade, occupation, or business


    According to the law, if they fail any of those tests, you are missclassifying.


    The 2nd test i've bolded is what really concerns me. The subcontractors that complete this work do have their own employees typically (rarely its a case where its a husband/wife team or only 1 individual). But ALL of their core businesses are office cleaning/janitorial work.

    So I guess my question is, will these laws apply to 1099's that work individually (Example: Uber's IC's) only, Or also subcontractors like in my case who typically have their own business (LLC, or Corp) and their own employees, etc.

    Also, which would be the best way to pose my business model? Maybe a referencing agency? To be able to stay legally compliant.

  3. #23
    Join Date
    Dec 2009
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    Lake Chapala
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    2,954

    Default Re: Subcontracting

    You are OK.

  4. #24
    Join Date
    Oct 2016
    Posts
    3,306

    Default Re: Subcontracting

    Quote Quoting Csiscool
    View Post
    Geez, this thread went out of control.

    This question im about to ask may also spark another debate.

    According to California's ( I pay attention to California laws as they tend to set the precedent for most states) new pending independant contractor laws (which are likely to pass), state these IC Regulations:

    - The IC must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work

    - The IC performs work that is outside the usual course of the hiring entity’s business

    - The IC is customarily engaged in an independently established trade, occupation, or business


    According to the law, if they fail any of those tests, you are missclassifying.


    The 2nd test i've bolded is what really concerns me. The subcontractors that complete this work do have their own employees typically (rarely its a case where its a husband/wife team or only 1 individual). But ALL of their core businesses are office cleaning/janitorial work.

    So I guess my question is, will these laws apply to 1099's that work individually (Example: Uber's IC's) only, Or also subcontractors like in my case who typically have their own business (LLC, or Corp) and their own employees, etc.

    Also, which would be the best way to pose my business model? Maybe a referencing agency? To be able to stay legally compliant.

    It doesn't matter to you how the contractor you use classes his workers it is their problem, not yours.

  5. #25
    Join Date
    Oct 2019
    Posts
    11

    Default Re: Subcontracting

    Quote Quoting PayrolGuy
    View Post
    It doesn't matter to you how the contractor you use classes his workers it is their problem, not yours.
    Understood, now what about when using a husband/wife team who doesn't have their own employees. Or an individual on their own? Is it even possible to do this legally when using an individual? Just curious.

  6. #26
    Join Date
    Nov 2013
    Posts
    6,472

    Default Re: Subcontracting

    Quote Quoting Csiscool
    View Post
    Geez, this thread went out of control.

    This question im about to ask may also spark another debate.

    According to California's ( I pay attention to California laws as they tend to set the precedent for most states) new pending independant contractor laws (which are likely to pass), state these IC Regulations:

    - The IC must be free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work

    - The IC performs work that is outside the usual course of the hiring entity’s business

    - The IC is customarily engaged in an independently established trade, occupation, or business


    According to the law, if they fail any of those tests, you are missclassifying.


    The 2nd test i've bolded is what really concerns me. The subcontractors that complete this work do have their own employees typically (rarely its a case where its a husband/wife team or only 1 individual). But ALL of their core businesses are office cleaning/janitorial work.

    So I guess my question is, will these laws apply to 1099's that work individually (Example: Uber's IC's) only, Or also subcontractors like in my case who typically have their own business (LLC, or Corp) and their own employees, etc.

    Also, which would be the best way to pose my business model? Maybe a referencing agency? To be able to stay legally compliant.
    What you posted here is pretty much what is called the ABC test that most states have adopted to determine if someone is misclassified as an IC when they are in fact employees. It is not new.

    Take specific notice to the C portion of the test to answer your next question.

    The IC is customarily engaged in an independently established trade, occupation, or business
    Quote Quoting Csiscool
    View Post
    Understood, now what about when using a husband/wife team who doesn't have their own employees. Or an individual on their own? Is it even possible to do this legally when using an individual? Just curious.
    A husband/wife team or an individual that doesn't have a bona fide business would likely fail the C test. They would be considered your employees and would join the ranks of the unemployed if but for your business. They would not be 1099s but W-2 employees. That means payroll, withholding, SS and Medicare taxes, workman's comp. etc.

    It's not sufficient to hire ICs to work for your business without having a signed contract with each business entity that you contract with. You also have a responsibility to obtain proof of business liability insurance from each one of them. That is that you need to obtain a certificate of insurance naming your company additionally insured. Failure to do this could make you liable for damages to property or injury to third persons as a result of damage caused by who you contract with.

    If you hire a company that doesn't have the necessary insurance, then it will be you that gets sued for damages under the doctrine of distributive justice. You best have some pretty extensive liability insurance in this type of business.

    Quote Quoting llworking
    View Post
    You need to just admit that you got it wrong this time.
    Post something, anything in the law that shows me I'm incorrect and I'll admit it. Until then, I still think you are incorrect yet it is somewhat of a semantic argument.



    Quote Quoting PayrolGuy
    View Post
    It doesn't matter to you how the contractor you use classes his workers it is their problem, not yours.
    In most cases that is true. However, there are cases where you have joint employers under the law depending on who controls what.

    The Fair Labor Standards Act (FLSA) allows joint employer situations where an employer and a joint employer are jointly responsible for the employee's wages
    Many published cases where employees of an IC sue the contractee as a joint employer.

  7. #27
    Join Date
    Oct 2006
    Posts
    15,679

    Default Re: Subcontracting

    Quote Quoting budwad
    View Post

    Post something, anything in the law that shows me I'm incorrect and I'll admit it. Until then, I still think you are incorrect yet it is somewhat of a semantic argument.
    That is a really silly statement Bud. First, there isn't going to be anything in the law that addresses the issue, because the state has no reason to regulate something like that. Therefore you can't find anything that proves you right either. The second part of your statement is even sillier. That is just saying that it doesn't matter if there is something in the law because its not important anyway.

  8. #28
    Join Date
    Nov 2013
    Posts
    6,472

    Default Re: Subcontracting

    You have nothing. Your wasting my time. You don't comprehend what a subcontractor is. verses an IC. It is that simple.

  9. #29
    Join Date
    Oct 2016
    Posts
    3,306

    Default Re: Subcontracting

    Quote Quoting Csiscool
    View Post
    Understood, now what about when using a husband/wife team who doesn't have their own employees. Or an individual on their own? Is it even possible to do this legally when using an individual? Just curious.
    Sure individuals can be independent contractors but the line is much thinner and where one can get into problems with state and federal agencies.

  10. #30
    Join Date
    Oct 2019
    Posts
    11

    Default Re: Subcontracting

    All of my subs sign a subcontracting agreement and we require proof of business licensing and insurance.

    My question is, what happens when you have an individual who works as an employee for the LLC or as a Sole Proprietorship, or corporation. Where they do everything. (Their own equipment, Insurance’s and they are the one doing the labor).

    What are ways to protect yourself in these types of situations?

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