# I'm new to the business, am I getting screwed? (legal 1099 content)



## thesweetness (Aug 15, 2011)

So I recently switched professions into the world of general contracting/construction. With no experience and wanting to learn as much as I can so I can be a professional carpenter one day, I took a laborer position. Before starting I was told I was going to be a paid X amount an hour and that they aren't witholding taxes, and I'll be getting a 1099. Needless to say that also excludes me from insurance and workmans comp. This was all new to me so I didn't really ask any questions. They had me sign a peice of paper saying I would and wouldn't adhere to certain standards, and one of those things being that they can fire me at any time for any reason. Another stating I wouldn't solicite myself to other sub contractors on the jobsite. They also give me a very clear schedule from 7:30am-5:30pm Monday-Saturday. 

My question is that does this sound normal for a guy in my position? I've been reading up on the legal standards of 1099 workers and it sounds like they are paying me as a 1099 but treating me like an employee. Should a laborer/entry level worker be considerred an skilled labor self employed independent contractor or am I being taken advantage of?


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## JHC (Jun 4, 2010)

No they are most likely breaking the law paying you as a subcontractor when you clearly work for them. Very common thing in this business, and it allows them to save money by not paying a dime in payroll tax or unemployment. 

You still should be covered under someone's workers comp.


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## Framer53 (Feb 23, 2008)

thesweetness said:


> So I recently switched professions into the world of general contracting/construction. With no experience and wanting to learn as much as I can so I can be a professional carpenter one day, I took a laborer position. Before starting I was told I was going to be a paid X amount an hour and that they aren't witholding taxes, and I'll be getting a 1099. Needless to say that also excludes me from insurance and workmans comp. This was all new to me so I didn't really ask any questions. They had me sign a peice of paper saying I would and wouldn't adhere to certain standards, and one of those things being that they can fire me at any time for any reason. Another stating I wouldn't solicite myself to other sub contractors on the jobsite. They also give me a very clear schedule from 7:30am-5:30pm Monday-Saturday.
> 
> My question is that does this sound normal for a guy in my position? I've been reading up on the legal standards of 1099 workers and it sounds like they are paying me as a 1099 but treating me like an employee. Should a laborer/entry level worker be considerred an skilled labor self employed independent contractor or am I being taken advantage of?


It is not legal to pay an hourly person with a 1099.

IRS has section on their site about this. yes, you are being taken advantage.


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## rollerroman (Jul 20, 2010)

*Yes and no*

Depending on what state you live in you may be required to be licensed to do any work on a construction site. The big issue is that if you get caught, you personally are liable for the fine which in Oregon is a thousand dollars. The GC is liable for hiring someone who is unlicensed also. That being said, work hours and any other number of things can be determined by the general contractor and have no barring on whether you are an employee or not. Biggest things, who pays you, how do they pay you, who tells you what to do, do you own your own tools etc? 

My advice, if you plan on working there more than a week, ask to be put on their payroll. Don't be surprised if they fire you though.


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## rselectric1 (Sep 20, 2009)

You are clearly a subcontractor. This company is skirting the rules and taking advantage of some naivety on your part.

Also, be aware that you will need to pay the self employment tax (which is the amount a true employer will match) when you file your tax return for this year. It's not cheap.

It's a good thing you caught on sooner rather than later.

Edit: They are the ones in the wrong here. I would talk to a local tax adviser in your area and if you feel comfortable-call them on it. They can face some sanctions for doing business this way.


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## Leo G (May 12, 2005)

They forced you to become a subcontractor and then told you you can't subcontract. The are telling you that you have to be there at a specific time and get to leave at a specific time. I am sure they will be telling you when and how to do specific projects for them. All of this is done by an employee. 

A subcontractor has no set hours and can get the job done anyway he sees fit as long as the final outcome is what was called for. The only time restraint is the final timeline.

Are you getting a contract signed for each and every job they assign to you. Is there a specific price for each and every job? If not then they are treating you like an employee and paying you like a contractor. 

You are being taken for a ride.


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## thesweetness (Aug 15, 2011)

I can't imagine myself as anything close to what I consider to be a sub contractor. All I said was I want to learn and that I'll do anything. The idea of them using me for specific jobs seems far ahead of my abillity. I'm the guy they tell to go carry lumber, sweep up, grab a nail gun and help nail this or that in, cut those 2x10s and set up that staging etc. 

I feel like I should confront them about it but it would most defianatly mean the end of my job. I'm not sure if these guys even have a payroll, some of the other guys have their personal names on their trucks. I'm a little conflicted because I live on martha's vineyard and jobs can be scarce here, especially because these guys gave me a shot with no experience. I know I can't go on as a 1099 worker, I don't get paid nearly enough to be able to pay a self employed tax and be able to live. it brings me to like 300 a week


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## Framer53 (Feb 23, 2008)

300/week on Martha's Vineyard??? Who are you kidding??

As far as work is concerned, i wouldn't worry about it, there are plenty of jobs on the island. Shoot even maids make more than that.....


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## Leo G (May 12, 2005)

Go work at McDonalds. You will make your $300/wk and be able to keep it. If you are subcontracting you need to charge out at least $50/hr. This enables you to pay for the things you need to be a subcontractor. 

If they are giving you a 1099, what company name is it made out to? Are you registered to do business in Mass?


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## Randy Bush (Mar 7, 2011)

Sounds to me like you are on the short end of the stick. You are being used for sure.


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## rselectric1 (Sep 20, 2009)

thesweetness said:


> but it would most defianatly mean the end of my job.


Believe me, if you can even call it a job it will behoove you to get away from them.

$300 a week? 

Listen good and hard! Hang around and read the threads in this forum and become a regular poster here. You were smart enough to figure out that you were probably being taken so you might just have a future in the business.

The regulars here will be a great resource and will help you if you are serious about making this a career.

All we ask is that you be honest. (Not that I am seeing anything dishonest in your thread btw-but sometimes it helps to lay it all out for us-like an introduction in the intro section-hint hint)

Once you get a few dozen posts here, the posters here will bend over backwards to help an ambitious person who needs advice. :thumbsup:


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## thesweetness (Aug 15, 2011)

rselectric1 said:


> Believe me, if you can even call it a job it will behoove you to get away from them.
> 
> $300 a week?
> 
> ...


Great thanks so much for all the advice guys. I've followed up with another builder here who's interested and said would pay me as an employee and take taxes out, also give health insurance, dental, 401k, and a cell phone. It sounds like a much better situation, I just hope he ends up hiring me. I'll be sitting down with him in two weeks or so so I'll stick out my current "job" until then. I'll just try to think of it as experience rather than my income until then. That $300 a week I mentioned was after setting aside 44% for taxes on $16/hr. Sounds decent starting out until you take a look at the taxes and realize you're "self employed". yeesh. 

I'll head over to introductions and introduce myself


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## Anti-wingnut (Mar 12, 2009)

To the OP: You are being taken advantage of



Framer53 said:


> It is not legal to pay an hourly person with a 1099


Not to quibble, but I believe that a 1099 (sub)contractor can be paid hourly. Examples could include Project Management, faux painting and finish carpentry. But there are no scenarios that I can think of where a laborer could legally be 1099 'ed




thesweetness said:


> They also give me a very clear schedule from 7:30am-5:30pm Monday-Saturday


Are you getting overtime?


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## catfish (Jul 19, 2007)

Anti-wingnut said:


> To the OP: You are being taken advantage of
> 
> 
> 
> ...


When he was told what hours to work, that failed the test. IRS questions ask "Do you set your own hours"


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## Anti-wingnut (Mar 12, 2009)

Catfish,

I knew instantly that the OP failed the test as a true sub, I've been doing this stuff a long time, and know most of the scams. I was challenging Framer53's assertion that a true 1099 contractor or sub cannot be paid hourly. I believe this is incorrect.

Your answer to my quote is without context


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## Framer53 (Feb 23, 2008)

I should have gone further and said the hours can't be set for a sub. Hourly pay is one measure NY uses to determine subs or employees. I should have clarified....


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## thom (Nov 3, 2006)

catfish said:


> When he was told what hours to work, that failed the test. IRS questions ask "Do you set your own hours"


That is part of the IRS standard but makes no sense. Let's say you're a plumber hiring an excavator to do an underground. You the plumber must be there to supervise the excavation to insure proper location, depth, and grade. Of course you will set the time, location, and how the work is done. That doesn't make the excavator your employee for the 4 hours it takes him to do that job.


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## CJ21 (Aug 11, 2007)

Yes you is getting screwed, a guy try to do me like that. If you is a laborer you should be getting pay by the hour.


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## Anti-wingnut (Mar 12, 2009)

catfish said:


> When he was told what hours to work, that failed the test. IRS questions ask "Do you set your own hours"


:no:



thom said:


> That is part of the IRS standard but makes no sense. Let's say you're a plumber hiring an excavator to do an underground. You the plumber must be there to supervise the excavation to insure proper location, depth, and grade. Of course you will set the time, location, and how the work is done. That doesn't make the excavator your employee for the 4 hours it takes him to do that job.


There has been a degree of mis-statement and mis-understanding by what criteria the IRS uses to determine that an individual is a employee or a contractor.



> _Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
> 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.)
> 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?_


Hours worked is a part of behavioral control, but does not instantly make the individual an employee. Even the IRS is not black and white on this subject, but realizes that there is a pattern and several parts to the discernment of an employer-employee relationship.

Subs's may easily be required to work reasonable stated hours. For example, you can't have a plumber rumaging around a house at midnight, while the HO's are asleep and the GC is out at the bar. Contractors may be required to work hours which are deemed reasonable.


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## Leo G (May 12, 2005)

thom said:


> That is part of the IRS standard but makes no sense. Let's say you're a plumber hiring an excavator to do an underground. You the plumber must be there to supervise the excavation to insure proper location, depth, and grade. Of course you will set the time, location, and how the work is done. That doesn't make the excavator your employee for the 4 hours it takes him to do that job.


The other thing is the plumber and the excavator will come to an agreement on the time they will meet there. The plumber isn't going to tell the excavator be here on Mon at 9am or your fired. You two will discuss the plan and come up with a time schedule that suits both of your businesses.

If he was an employee you would have the right to say be here on Mon at 9am and he wouldn't really have a choice.

The other thing is the excavator could say he didn't want to do it at that time for you and walk away from the job and the only thing he would be out of is that portion of work. If the employee did that they could be fired.


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