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Employee vs Contractor

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  • Employee vs Contractor

    I posted this in the Virginia Labor law form also.

    I work part time for a DJ multi op service in VA. My contract states I am a contractor but doing some research, it seems that I am actully an employee. "They" tell me where to go, and when to be there. "They" have trained me. I use 'Their" equipment and music. I use my own vehicle. I deduct mileage.
    "They" set the pay scale. I only receive a set amount of money as pay and it does not change except for distance traveled to and from a job. "They" store all the equipment that must be picked up, delivered for the job, torn down and stored back in "Their" storage area. I have no financial risk involved. I can quit with a 30 day notice acording to contract, but also have a "non-compete clause" in it that is very time and area specific.

    "They" take no withholdings from my pay. I pay those myself each year.

    If I am an employee by law, and not a contractor as it states in the contract, shouldn't they be deducting the withholdings?

    "They" have been in business many years and I would think "They" should no better, but perhaps "They" know something I don't .... yet.

    Thansk for any comments

  • #2
    Very interesting. An IRS School of Taxation???
    "What would a reasonable person do?"

    A.S. Paralegal
    Criminal Justice Student--B.S.

    "Give this guy 15 cents and tell him to go to hell."


    • #3
      Well this is commonly done by many businesses. I cannot really respond definitively because usually the control test is used to dictate if you are an employee or a contractor and the type of work that you do, the hours you work, whether you are reimbursed for mileage or not and so on are all issues.


      • #4
        1099 Contractors vs. W-2 Contractor?

        I am going to work overseas on a rotational basis (28 on and 28 off) on a Fixed Term Contract with an oil company in Oman. I want to defer income as much as possible and it seems that if I am paid via a 1099, I can set up a type S corporation and thus defer more income in IRA plan and also set up a Flexible Spending plan.

        I have heard from others on this type set-up that the company issued them W-2 forms showing their 2005 earnings. If you are truly a contactor, shouldn't the company be issuing a 1099 and not a W-2?

        If I get issued a W-2, can I still set up an IRA or 401K plan and contribute the higher amounts (I am over 50 and thus want to also contribute the 'catch-up ' amount also).

        Can someone explain the difference between the 1099 and W-2 and how I should defer my income via retirement accounts under each scenario? Where can I find information on this? Should I take to a CPA or tax attorney to get everything set up?

        I am starting in 3 weeks so I don't have to worry about 2005 when I was an employee. I just want to get this new Fixed Term Contract position started correctly.

        Please advise. Thanks in advance.


        • #5
          To the Original Poster:

          As Elk Law stated, this is commonly done, and often it is a misclassification. You would need to present the specifics of YOUR situation to the Department of Labor and/or the IRS to determine for sure.

          Based on what you have posted, it DOES sound like a misclassification. Particularily by the time you reached the "non-compete" clause, although any one factor alone isn't really the determining factor.


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