is it legal for a company to pay a freelancer(1099) through a payroll service and have the payroll co. charge you a 5% service fee and deduct 8.5% for workman's comp and general liability?

Is there a maximum for these deductions?

thank you

Many payroll outsource firms do both W-2 and 1099 workers. This is not uncommon.

Since your employment relationship is considered to be that of an independent contractor, labor laws do not apply. In essence, you are not an employee of the firm. What ultimately matters is the agreement you made with them.

I can tell you from experience that independent contractors are required to hold their own insurance. It sounds to me that this arrangement helps you get the insurance you need in order to work for them. The company holds no obligation to help you obtain insurance. My best guess is that's the reason behind passing an admin fee to you.

So if they wanted to charge me a 30% service they could legally get away with it? In essence I am paying them to get paid.

there has got to be a max for workman's comp & liability coverage.
Which government office would handle a complaint in this matter, dept. of labor?

thanks

It's whatever you agree to in your contract.

This is a contract issue. Not a labor issue.

Pattymd is correct! It's whatever you agreed to.