Should I Be Paid As W2 or 1099

[Tomw]

I work for a company who changed their hourly rate as a result of the global virus which lead me to researching unemployment questions and after that research I’m unsure if I should be paid with 1099 as an independent contractor or W2 employee. My contract says I’m an independent contractor.

I’m a licensed massage therapist and Company ABC has their own method for massage. Company ABC requires all us independent contractors to take one class per year hosted by company ABC to keep current with the certification.

Company ABC has a sister company ABCDEF, and Company ABCDEF employs many people who are certified in their method. Company ABCDEF also has a contract with Factory 123. The independent contractor works at the location of Factory 123 to massage their employees. Factory 123 pays Company ABCDEF based on total hours worked, then Company ABCDEF keeps their cut, and pays the independent contractor an agreed hourly rate.

The independent contractors are located in many states throughout the nation, mostly all outside the state where Company ABCDEF is located.

I’ve had this job for 7 years. I work a few hours per week but can schedule time off for unpaid vacation. I supply my own massage table, I’m required to dress professionally as given by a general outline from company ABCDEF, I will lose this job if I don’t take an annual ABC class, I can only owed the ABC massage method at the factory and must see in person every 30 minutes as dictated by company ABC, I cannot preform more or less work at Factory 123 without approval from Company ABCDEF and if I’m let go from the company or leave the company then I have a non compete to perform any massages at Factory ABC for 3 years.

Am I more likely an independent contractor or employee? I can answer more details if you have questions but request this remain anonymous.

[Taxing Matters]

Are you allowed to do massage for you own clients (i.e. people not connected with ABC) and do you in fact do massage for your own clients? Do you have another job/business that you work for the hours you're not working for ABC? Is the massage table the only tool or equipment you use and if there are other things you use, who supplies them? And in what state is all this taking place?

[adjusterjack]

The IRS has comprehensive rules that help you determine if you are an employee or independent contractor. It doesn't matter what your contract says.

https://www.irs.gov/businesses/small...ractor-defined

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

If you are still not sure after reading those pages you can file Form SS-8 with the IRS and the IRS will determine if you are an employee or independent contractor.

https://www.irs.gov/pub/irs-pdf/fss8.pdf

[Taxing Matters]

If you are still not sure after reading those pages you can file Form SS-8 with the IRS and the IRS will determine if you are an employee or independent contractor.

https://www.irs.gov/pub/irs-pdf/fss8.pdf

Just be aware that the company will find out who filed the inquiry should the IRS need to contact the company for information to make its determination or should the IRS determine that it is your employer for federal tax purposes.

[Tomw]

Just be aware that the company will find out who filed the inquiry should the IRS need to contact the company for information to make its determination or should the IRS determine that it is your employer for federal tax purposes.

This is my concern. I’d likely be fired if this information was known.

Are you allowed to do massage for you own clients (i.e. people not connected with ABC) and do you in fact do massage for your own clients? yes, as long as it’s at a different location and as long as I’m not giving massage to any Factory 123 employees. And I still must take the ABC class every year to perform their massage both at Factory 123 and other personal locations. I can perform another massages on my own too.
Do you have another job/business that you work for the hours you're not working for ABC?yes, for awhile most of my income came from Factory 123 & Factory 789, but factory 789 closed so I took a W2 job and kept Factory 123.
Is the massage table the only tool or equipment you use and if there are other things you use, who supplies them? They supply the paperwork which all employees must fill out, they supply the software where I log my work and who I massage and how long. That information is complied and shared with Factory 123. I use my own laptop to log into their software and use my own paper to print their forms and my massage table and I supply the cleaning supplies and lotions and sheets all for my table.
And in what state is all this taking place?
This takes place in 40 states across the country. Roughly 400 factories across the country.

Answers above in RED

[adjusterjack]

And in what state is all this taking place?
This takes place in 40 states across the country. Roughly 400 factories across the country.

I think TM was asking what state you are located in.

This is my concern. I’d likely be fired if this information was known.

If that happens and it turns out that you (and others) were illegally misclassified, you'll have the satisfaction of knowing that you cost the cheaters a great deal of money because they will have to treat employees as employees and likely owe back pay to all of them. You can also report them to your state's labor and workers compensation regulatory agencies if they are violating UI and WC laws.

[Tomw]

I think TM was asking what state you are located in.



If that happens and it turns out that you (and others) were illegally misclassified, you'll have the satisfaction of knowing that you cost the cheaters a great deal of money because they will have to treat employees as employees and likely owe back pay to all of them. You can also report them to your state's labor and workers compensation regulatory agencies if they are violating UI and WC laws.

Does my state matter or does the company headquarters ? Im in Ohio.

I would have that satisfaction if hundreds of us our being cheated. But if I’m wrong, I’d still likely be fired and have no satisfaction. That’s why I’m hoping to get some advice here before I go down a more legal path. Based on the information I provided, and any additional information I may offer, how would people here expect this job to be classified?

[adjusterjack]

Does my state matter or does the company headquarters ? Im in Ohio.

Your employer would have to comply with the UI and WC laws of your state, as well as those of the federal government.

Based on the information I provided, and any additional information I may offer, how would people here expect this job to be classified?

If you read the material on the IRS website, how would YOU classify your position? There's enough information there to allow you to at least make a guess.

[Tomw]

Your employer would have to comply with the UI and WC laws of your state, as well as those of the federal government.



If you read the material on the IRS website, how would YOU classify your position? There's enough information there to allow you to at least make a guess.

from the link you sent :

1) Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job? the work controls that I must use their massage method and must pay for their class every year so I’m certified in their method. however the body parts I massage are up to me and based on the problem area of the employee.
2) Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.) I am paid once per month, 60 days after I perform my work. The money is paid from Factory 123 to company ABCDEF, then a few days later Company ABCDEF pays me about 30-55% of what they collect. None of my expenses are reimbursed and I provide all my own tools but they supply the paperwork I have employees fill out and they supply the software where I document all my work.
3) Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business? I don’t get a pension or paid vacation, etc. it’s difficult to know if we are key employees but we’ve just been forced to take a 20% reduction in pay to keep Company ABCDEF from going under. This is because Factories in some states have been closed, so those people cannot massage at those factories due to this virus. Since about 1/3 of these factories are temporarily closed, the rest of us will need to collect 20% less, though Company ABCDEF continues to charge Factory 123 the same same. If those of us still working must take a pay cut for a few months to keep Company ABCDEF afloat, that sounds key to me, but it’s only key in terms of providing income to the company, I don’t actually do any personal work as would be the case for their accounting team.


In my opinion, I'm both. And I don’t know how to break the tie.
What do you think?

[PayrolGuy]

What is your "employer" know for?

Example, McDonald's = Hamburgers