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Employer converting me to independent contractor
Priest
Registered User regular
Registered User regular
Hey all,
Not sure how to proceed with this, or the tax ramifications.
I worked for a University until June of this year, and was paid as a regular, hourly employee. Then, in July, I ended up working for them again for 1 week. For these 40 hours of work, they want me to fill out a W-9 and be paid as an Independent Contractor.
I'm wary of this for the following reasons:
1. I am a student at said University. This is not a typical employer relationship.
2. Switching to IC taxes me at a significantly higher rate than as hourly, and I am not being compensated more in return.
3. I'm not sure of the Legal/Tax implications of being both an Hourly and IC employee for the same employer during a single tax year. (Filing a W2 and 1099 for the same employer at the end of the year)
4. I have done this same week-long job the past 2 years and was always paid hourly. The only difference this year is that I left my standard position 4 weeks prior to this week of work.
5. Students employed at state universities do not pay into Social Security while attending classes and working, if paid hourly. By filing me as an IC at the same rate I'm paid hourly, not only am I now forced to pay my usual share of SS taxes, but also the University's share of SS taxes. Essentially, this is the University trying to save money by paying me less (Yay).
I talked to HR, but they said I'm a student, and that isn't their gig. I talked to Student Employment Services, and they're not sure what to do, as they feel this is something HR should handle. (They typically handle Work Studies, etc).
Anyone with experience in this that has advice?
Thank you kindly.
Not sure how to proceed with this, or the tax ramifications.
I worked for a University until June of this year, and was paid as a regular, hourly employee. Then, in July, I ended up working for them again for 1 week. For these 40 hours of work, they want me to fill out a W-9 and be paid as an Independent Contractor.
I'm wary of this for the following reasons:
1. I am a student at said University. This is not a typical employer relationship.
2. Switching to IC taxes me at a significantly higher rate than as hourly, and I am not being compensated more in return.
3. I'm not sure of the Legal/Tax implications of being both an Hourly and IC employee for the same employer during a single tax year. (Filing a W2 and 1099 for the same employer at the end of the year)
4. I have done this same week-long job the past 2 years and was always paid hourly. The only difference this year is that I left my standard position 4 weeks prior to this week of work.
5. Students employed at state universities do not pay into Social Security while attending classes and working, if paid hourly. By filing me as an IC at the same rate I'm paid hourly, not only am I now forced to pay my usual share of SS taxes, but also the University's share of SS taxes. Essentially, this is the University trying to save money by paying me less (Yay).
I talked to HR, but they said I'm a student, and that isn't their gig. I talked to Student Employment Services, and they're not sure what to do, as they feel this is something HR should handle. (They typically handle Work Studies, etc).
Anyone with experience in this that has advice?
Thank you kindly.
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Unfortunately, I have not been paid yet. They bungle it every year, and I usually end up getting paid 8-10 weeks after the fact. I can't really complain because complaining would mean I won't get the work in the future, and I need the money (it pays well for teaching pay).
No agreement was ever signed. Prior years, they just tacked 40 hours on to my pay at a higher rate than I was normally paid. This year, I called them multiple times asking about pay, they deflected, and now they're emailing me and my colleagues asking us to sign a W-9.
Fairness aside, my primary concern is whether this will mess up my taxes, and if it is legal.
If it is legal and won't mess up my taxes, I'll probably let it slide. It sucks immensely, but the people involved have a disproportionate affect over my career, future jobs, and whether or not I get a diploma in December. My employer in this particular case is my advisor, program coordinator, degree supervisor, and signs off on whether I get to graduate or not, and will be involved in getting me my first job, as well as any summer employment for the next 5-10 years. Once I'm graduated, I have more power, but until then, I'm literally at his mercy.
Lose the battle to win the war sort of thing.
I wouldn't. You also probably aren't technically a 1099 worker anyways, because with 1099 comes the ability to pick your own schedule. Also if you worked on location and had a 'workstation' then you were an employee. Feel free to clue the IRS and your local DoL in, they'd probably be very interested in all that other bullshit going on in this place.
You need to set aside 40% of your paychecks to cover your taxes, also you have to pay quarterly if you made over something like 3k a year.
The advantage to being 1099 is that you can expense everything. Just have to keep good records.
As for your situation, I'll just post this link as it confirms what's already been said here. SHRM
Edit: Link being funny. I Googled "can i be an employee and a contractor at the same time"
Aside from the advice everyone else has given, I want to mention that this is a situation you should really get out of as soon as possible. A person having this degree of power over you is not a healthy work environment and will let them continue to try to take advantage of you.
He is supposed to be there to help you graduate, you aren't there to make him happy so he can bless you with a degree.
You're not wrong in theory... but he probably is there to make the guy happy so he can be blessed with a degree.
Welcome to any niche degree and Ph.D program in history. Also, my degree is in a rare field of teaching (hence the niche), but comes with the doubleplus bonus of being abhorrently underpaid. Essentially, I need the money, regardless of being taxed 15% more. And my current job has me working 7-4 every day, in a position where I'm teaching and unable to make calls during the day, making it exceptionally hard to contact HR/SES.
Will try again today, see where I get.
On a different tangent - are there any limitations to who can be considered an IC?
For example, for this week I had to:
1. Show up at a pre-determined time
2. Drive myself, co-workers, and multiple minors to a location for a camp
3. Teach for pre-determined scheduled hours, pre-determined curriculum
This doesn't really sound like Independent Contracting, no? Or is IC just the wild-wild-west of employment and anyone can be classified?
Here's an IRS link that sure makes it look like you're not an IC.
The IRS will push back on some of this stuff if people report it but most people don't because they prefer to eat instead of being morally vindicated.
But OP will need to make sure he talks with an ombudsman or the dean first because chances are he'll become vindictive.
Pretty much if you cannot choose your schedule, you're not a contractor.
There's some wiggle room on schedules, for instance, you have to be available during normal business hours at least some of the time, but if you have no influence, it's not 1099c. Generally what happens is someone contacts a contractor and goes, "I would like to have X project done, and I would like to have it done by December 24th." And then you all sit down and agree upon a timeline and milestones, and sign a contract.
If you are basically acting like an employee (teaching) then you're not.
But like I said, that doesn't mean you can't agree to sign the paperwork making you de facto a contractor. There's really specific guidelines for IC workers, but, signing a 'contract' changes these things because you're agreeing to the milestones and timelines (teaching classes whenever they ask, driving colleges, whatever).
It will have huge ramifications for your taxes.
This bolded part right here? If you are an independent contractor, you need to have insurance covering EVERY POSSIBLE NEGATIVE OUTCOME of having these people in your care. If you are an regular employee, then the employer should have that insurance. But, seriously, you need to be covered one way or another, and quick like...
there are two reasons a company would turn someone into an IC
1) Not responsible for benefits
2) Not responsible for payroll taxes
Both become your responsibility. Can't remember the figure but when you're an IC you effectively pay your own payroll tax which is something like 7%.
I know not everybody has this option available to them, but I would strongly consider resigning if they refuse to offer you a higher wage in exchange for this change. This trend is sweeping the nation, and people who don't understand the consequences happily go along with it.
we also talk about other random shit and clown upon each other
Are you still working as an IC? Or was that just a 1 week thing (your initial post seemed to suggest it was a week thing this summer)?
If this is continuing, then I would highly consider speaking to someone - I agree, something 2. is a bit more problematic for you legally, in that in addition to payroll taxes / whatever, there's actual legal risk there.
If it was just a week, I'll give a bit of an alternative perspective - hiring someone at a university (especially if it's a public university) is somewhat of a giant pain in the ass, as you're dealing with extremely strict rules due to union negotiated CBAs. So it may be the case that to hire you for week, they would have had to officially post a position, screen resumes, and go through an official hiring process (and at our university, we have to preferential re-hire people fired from other labs, even if we're trying to hire an undergrad who's worked in our lab before); they may have done things this way to actually try to get you paid at all, and may not totally realize the tax implications of the way they went about it.
Also, are you a Ph. D. student? Full-time? That might have other implications as well (i.e. hiring as an employee might jeopardize student status; whereas fellowship pay is basically some bizarrely vague non-earned but still need to pay tax on income according to the IRS)
IANAL etc. but I'm not sure him withholding your degree or not letting you graduate because you caused a kerfuffle is something he's legally allowed to do. Regardless of him being your supervisor specifically for the work you're doing, I'd be speaking to whoever signs your paycheck. Get someone from student resources and HR together in the same room as you and actually have them talk about it. Somebody has to know what's going on, and if they don't, I wouldn't sign anything. If they can't figure out who's responsibility this is and they're 8 weeks delinquent in paying you, I'd be really, really suspicious. The whole thing sounds like a shitshow to me, but I don't have your perspective on any of it.
Feel free to give roundabout numbers or PM specifics if you don't feel comfortable.
For instance, as an IC, you need to file if you made over $400.
And for tax purposes, if you made over $10k in a normal tax year (you should honestly always file taxes).
But if we're talking a few hundred dollars, it might not impact much, and you may only need to keep $100 of that $400 for taxes.
I'm an academic advisor who does a lot of these things, and I can tell you that under no circumstances should an advisor/coordinator be the employer supervisor for anyone in their cohort as it is a conflict of interest. This is something I would bring before my dean pretty quickly as there are a lot of problems here.
Is this a public institution?