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The offer says independent contractor, not employee as I thought
Jan 2011
I recently interviewed for a job that I really want, and think that the position would work out really well with my family's schedule. It would keep my mind and skills engaged/challenged, but still offer plenty of life balance. I got the offer letter yesterday, and after telling me in the interview that the job would definitely be as an employee, the offer letter now that I would be hired as an independent contractor and I'd get a 1099- for the exact same pay.
I called them up to ask if that was a mistake, and they said no- they're a small, new company and they decided to go that route (they're also hiring for two other similiar positions that would be paid the same way).
I really like and trust them overall, and want the job, but should I be concerned about being an independent contractor instead of an employee? I really wanted health insurance, since we're paying a small fortune every month through my husband's employer, but now it's not going to happen (not sure if it would have even if I was hired as an employee).
I have another job possibility for much more money and benefits, but it would require lots of travel, a long commute, lots of late nights- just not do-able with small children. I need to make *some* money, and soon! Any advice is much appreciated! trying to decide
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I am so sorry that you are going through this. I think it is pretty underhanded to offer you a job as an employee and then send a hiring contract to you as an independent contractor.
If you accept their offer at the same pay rate that you agreed to or negotiated thinking you would be an employee, you will be making less money. Employee benefits are part of the pay that do not have a number attached to them the way a wage does and you will be paying all your own taxes at a much higher rate than as an employee. Not to mention higher out-of-pocket expenses for things like health insurance and any professional liability insurance, industry memberships, or licenses you might need to purchase for yourself that would have been covered for you as an employee. My advice would be to figure out what a comparable contractor rate would be for the pay they offered as an employee, and renegotiate your pay rate.
There are specific laws around what makes someone an employee vs a contractor - look them up and get clear about what your rights are if you take the position on as a contractor. If you are clear on what makes you an employee rather than a contractor, you can be aware if and when they want to treat you as an employee and may be able to renegotiate how you are hired.
If you do decide to accept as a contractor, whether at a newly negotiate rate or not, fully step into your roll as a newly self-employed person and write up your own contract for services that covers any areas not covered in their hiring contract. If possible, you would want something that locks them into some guarantees, such as they are hiring you for a specific length of time to do a specific set of activities at a specific pay rate, and such details as whether or not they reimburse for expenses or pay up front, pay for travel time or not, dates and term of pay, etc.
If you go the contractor route, research what is and is not tax deductible. Make sure to keep logs of things like mileage and create a system for tracking expenses that are tax deductible, as well as a savings system for projected taxes owed.
Good luck! Being an indy contractor can work out
I am not sure this is really advice for you as advice for the company. And I am not sure you giving them this advice will help you become an employee.
Many companies think they have discretion with regard to classifying employees as independent contractors, but in fact there are legal standards and if they do not meet the legal standards and they are audited on it, the company can become liable for the benefits and applicable taxes. Microsoft lost a big case in the 1990s and it was really expensive for them. When the economy is bad, the government tends to look more closely at issues like misclassification of independent contractors.
The legal standards are published by the IRS here: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html
A good overview of the implications of the Microsoft case are here: http://library.findlaw.com/2000/Feb/1/127759.html
Mary G
Something similar happened to me a few years ago, but with a huge company in SIlicon Valley. After a year, I became an actual employee.
The main thing you have to realize is that as a self employed person instead of an employee you have responsible to pay more taxes (essentially another 7.5% ish as the employer usually pays half of the 15% tax that I can't remember the name of and employee pays half. When you are 1099, you have to pay both...so unless they raise your pay by another 8 or so %, they are actually paying you less as they are shifting the payroll tax to you instead of paying it themselves). If you can, you should have a discussion with them about this...and try to renegotiate a higher level of pay so that your ''take home'' pay is the same.
The other issue is that you will not be able to collect unemployment insurance if they go under...so you may also want to try to negotiate a severance.
As far as healthcare and such, hard to advise on that.
Lastly, there are specific definitions of what is an employee and what is a contractor...stuff like whether they set your hours and specifically guide your work and whether you always work at the office and such...so they may or may not have the option to 1099 you depending on the job description...though if you really like them, I wouldn't be beligerant about that (or anything)...just ask friendly questions. Good luck!!!
I have been working as a 1099 contractor for almost 3 years b/c I work part-time, but have been exposed to most of the issues surrounding 1099 work. Many employers like to offer 1099 positions b/c of their cost savings (reduced benefits among them). It is also an easy way for the company to try you out, before committing to a full-time position. Before/If you accept the position, I would recommend you negotiate two things. First, express your desire to have a full-time position with benefits eventually - potentially even setting a timeline for the company to re-evaluate the position (next budget period perhaps?). Second, ask for a higher hourly or base rate. 1099 workers should be paid more b/c they have to cover costs like benefits on their own. Also, you will not have any taxes taken out of your paycheck, and may be responsible for paying taxes quarterly depending on how much money you bring in. One other point to note, if your company decides to terminate you, as a 1099 you will NOT be eligible for unemployment benefits. part-time 1099 worker
I currently work as a 1099 and am just thankful to have *any* job. Get a good accountant and you might not do too poorly. I work at home and have very flexible hours, so it is not that big a deal. Our kids have health insurance, but my husband and I don't. We pay cash for an ND.
Personally I think it is really cheap if this employer is going to require you to show up at certain times, etc. like an employee and not treat you like one. But that is my opinion.
I guess you have to weigh pros and cons, and count your blessings. decide
It sounds like a great opportunity for work you like that fits with the schedule of a family (I would love to find something like that), but as a former employee and now independent contractor, I have to tell you that there is a big difference, and you may be comparing apples to oranges, especially from a salary standpoint.
As an IC receiving a 1099, you are responsible for paying estimated taxes for state and federal tax, but also social security contributions (as an employee, these are paid by the employer). This may sound insignificant, but makes a pretty good size dent in your take home. You might try running the numbers both ways, as an employee and as an IC, then decide from there. It sounds like the second job pays better off the bat and provides benefits (this can be huge), but it might not work as well with your family or be work that you love. Ultimately, I'd go with your gut. You'll be at work a long time, so it is best to enjoy what you are doing if you can.
1099 gal
I read your post and had to respond. I was offered a indep. contractor job and took it without knowing much about what it meant. Fast forward to tax time, I was beyond shocked to learn that I had to pay close to $14,000 in taxes on my $28,000 a year salary!!! As an indep. contractor you pay ALL OF THE TAXES. The employer pays NONE! I did not have the benefit of writing any thing off since I went to an office and he provided all the equipment/supplies. I reconsidered my position and requested to be made an employee. Talk to your accountant to see what the impact on your family will be before you decide on the job. No longer an Indep. Contractor
Just so you know, it is a matter of law, not ''how the company decides to go'' whether one is an employee or an independent contractor. Of course, that law can be a bit grey in some areas. If you are in fact an employee and are being paid as an independent contractor, the consequences (mostly to the company) can be quite serious. A list of the types of factors that are looked by the IRS and the state in the event of an employment tax audit can be found in many places, including the IRS web site: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html.
If you are an independent contractor, you will need to make estimated tax payments on your income, including self employment tax and file a Schedule C form to report your self employment income and expenses. The good news is that you may be able to deduct some expenses you would not be able to as an employee.
Good luck with your decision! Accountant mom
I've been a consultant (read 1099 contractor) for many years. So here's the bottom line. You need to calculate the amount of money you're spending by supporting your own health/dental/life insurance, managing 401k, etc. You need to consider how much you'll loose by not getting paid vacation time. Usually contractors charge about 20% more than the going rate for the job to cover for their overhead. For them to offer you the exact same amount of money without any benefits is BS. Either they are naive or they're trying to save a bit of money and know that you now don't have a negotiating alternative. It's pretty lame. Unless it's for a 3-month period, at which point you have it in writing that your status will change, you have to negotiate for more money.
Here's what you say. Just for round numbers - let's just say they offered you 100k without benefits. Go back to them and say that while you're are pleased about the offer, it's standard for contractors to earn a higher rate, because contractors have to pay all their own overhead/benefits out of pocket. Tell them you've looked at the numbers and give them a choice -- either increase the annual pay to $120K, or hire you as a full-time employee with benefits. Maybe they come back and offer you $110. You have to decide if that makes up enough of your overhead. Really don't back down on this. It's how it works when you're a contractor. Sounds like they're trying to do a bit of a shell game on you. Good luck. You can do it. Remember, you're not asking for more pay, you're asking for what the fair market value is. It's not ego, it's not emotional, it's just business - period. Also remember: everything is negotiable. Sticking up for the contractors
We can't give legal advice, but you may want to do some research and see if the job can legitimately be characterized as an independent contractor. Small startups are not exempt from the law as far as I know.
From the Nolo Press dictionary:
independent contractor
A legal category of worker that is distinct and different from an employee. The key to the definition is that, unlike employees, independent contractors retain control over how they do their work.
If the company dictates your hours, what equipment you use, how you carry out the function -- they are just buying trouble for themselves by trying to avoid calling their hirees employees.
Bottom Line: DO NOT TAKE THIS JOB UNLESS YOU ARE DESPERATE.
What they are doing is illegal, but not uncommon. Check out the requirements for 1099 on the IRS website - if they are hiring you for a position that a W2 employee would normally fill, they can't pay you on 1099 just to duck taxes. I took a job just like this 18 months ago, because I was desperate. I now owe a huge amount in taxes. Self Employment tax is 15% off the top, and you are supposed to pay quarterly, but of course, I wasn't being paid enough to give up 15% of my check. You also have little recourse if they fail to give you a paycheck, unlike W2. Fortunately I have now found a W2 position, and am working out a payment plan with the IRS. been there, done that
Negotiating an overseas job offer
Sept 2009
I'm wondering if anyone has experience moving the family overseas for a job. The opportunity is in Sydney, Australia. My husband is Australian and we've spent time in Sydney, so I know it's a beautiful place and that I could definitely live there - at least for a while.
Three part question, really. (Feel free to only address a part.)
a) The offer - what should we negotiate for in terms of an overseas move (salary aside)? What's reasonable? We would be, after all, moving our lives and a family of 4 to a new country. Should they cover all moving expenses? Up to a certain point? (What could that cost?) Should they cover rent/housing until we find a place to live? Is it reasonable to ask for them to pay for assistance in the spouse finding a job...a recruiter or something? Not sure what a good or bad offer would be.
b) We have a young family - two babies. It feels like a good time to do something like this. No one gets pulled out of school, etc. Does anyone have experience to share making a move like this? Regrets? Encouragement? Advice? I've traveled and lived overseas in college, but I don't want to underestimate leaving the comfort of the Bay Area. Once you do a move like this, is it hard to come back - especially to the expensive Bay Area?
c) Has anyone lived in Sydney with a young family and have experiences - positive or negative - to share? Insight on lifestyle as well as quality of education/schools would be helpful too.
Thank you kindly for any advice or insight you have to share.
Potential American in Australia
For the moving overseas -
1. There is no negotiation - they pay for all the move and include in that packing - (well except cars). Transitional Housing tends to be a bit flexible but start with a month (that's normal) but ask for 6 weeks. You will need it unless you have a house to go to ASAP. Also ask for help in getting you a work visa - real help not wishy we shall see what we can do when you get here. Tax assistance - you still owe the us taxes and the need to get you an accountant and its fees paid. THIS is basic stuff all higher level americans get when abroad and they should be aware of this. Oh and schools need to be paid for if Sydney schools are not up to par (also a common thing)
2. yes we have moved when kids were babies and it was logistically hard but no one complains about missing friends etc - and so the upset is only limited to getting used to new routines (ie a few days or a week) for our 4 year olds its harder - they ask questions and dont want to....
3. Educational questions - find something like BPN - most cities have something like it - if you have twins (or heck pretend to) get in touch with the local twins club (always a wealth of information)
Moving abroad is amazing for all and if you decide to stay longer or less you will have broadened your mind - do it if the financials work out. been there and back
I consulted an American friend who relocated to Sydney a few years ago with her American husband and children, and while she was too busy to write much, here's what she said:
Umm.. first off, Sydney is the 12th most expensive city in the world. Don't kid yourself about cost of living. It's no better than Bay Area, I imagine. For us (now living in Eastern suburbs), worse than NYC-area.
1. All moving expenses with proviso you stay at least 3 yrs. Rent for at least 6 wks.
2. I could get into a Very Long discussion on education: different systems and expectations and public/private. With an Aussie spouse, this is less problematic in that at least one of you knows what to expect.
She also indicates that she'd be happy to give more details and information after her academic semester is over in mid-October. OP, contact me in order to get in touch with her. Katie
It's really going to depend on the company. I'd say that for each of those things, you'd probably be able to find a company where those items are negotiable.
Depending on what field you're going into and the companies, you'll find that many younger companies or tech companies have "unlimited" time off. Some people will tell you that this is just in the company's best interest so that they don't need to keep time on the books, pay you out when you resign, etc. But I've personally found that I prefer the "unlimited" plans. I just don't have to worry about counting my hours, scheduling out months in advance to make sure I have enough, worry that taking a day here or there will then prevent me from a longer vacation later in the year, etc.
As far as working from home, this really depends on what your role is, as well as the company's attitude for it. Again in tech, many jobs can be done remotely, and your managers will often be ok with it, provided you get your work done. If you need to be on calls all day, then that might also be ok. However, if your job entails lots of face to face time, remote work may be less of an option. While interviewing, ask what your company's policy toward remote work is.
I've found that financial companies are much more strict in this area (think Wells Fargo, BofA, etc.) They're just older and more conservative. Startups and other tech companies (Google and the like) are a bit more flexible--though Yahoo famously revoked remote working a when Marissa Mayer became CEO.
If you do get the ok on remote work or your company is open to it, make sure that in the beginning, those first several days of remote work are far, far, more productive. If you can show them "hey, we'll get more out of abracadabra when they work from home!" they'll be far more likely to let you do it. When I started my first job, I was working on a sort of skunkworks project and told my boss, "I can do two more hours of work a day if I don't commute." There was a week that I put in 100 hours. It was killer at the time, but I was always trusted with working from home for the following 8 years I was there and never had any problems.
Good luck!
I had a negotiation workshop by someone at the Haas School of Business, and a number of us have used what we learned to successfully negotiate in new jobs. Here are a few highlights:
- Negotiate it as a package, not piece by piece (not salary then vacation then start date, etc.)
- Establish trust, then say you want to find out more about what is most important to the other party and let them know a bit about what is most important to you so you can come up with an agreement that meets both parties needs better than the cookie cutter agreement. For instance, they say what is important to them is start date and keeping their salary expenditures low. You say what is important to you is their paying for professional development support (them paying for and giving you time for conferences and classes) and having flexibility in your hours. Then you negotiate something where you get some of what you want and they get what is important to them. I've phrased this as "I understand you have constraints about recurring expenses like salary, and I'm happy to be flexible up to a point, if you can be flexible with me around ____"
- You want to negotiate in such a way that it doesn't leave a bad taste in their mouths - this is the beginning of a relationship. Show that you are interested in finding creative ways to meet their needs, as long as they will do the same for you.
- Everything is on the table, even if they say it isn't. For instance, if they say vacation can't be negotiated, you still put it in the package of your wishes, and when they can't grant that, you ask them what they can offer you from the things they know you want instead (additional professional development days? ability to work short days when your spouse is out of town?). Sometimes they'll verbally agree to something non-standard and say they can't put it in the offer letter. Up to you how you feel about that. In a case where there was a lot of trust, I wrote a thank you note by email thanking new boss for giving me permission to do X, Y, and Z specific thing, just so I had a record. Probably wouldn't hold up with HR, but in case you get a new supervisor, good to have a record of it.
- One technique is to craft a few packages that are fairly equivalent to you, and then let them pick once you've had the conversations above.
- In addition to the topics above, I would consider: other benefits (health for you/family, retirement), perks like a laptop for home or a separate phone for work, working title on your business card, work location (private office/window, as well as city), ability to take leave without pay before you can take vacation, ability to opt out of things you hate (presenting at conferences, working weekends), ability to opt into projects you especially want, taking your dog to work, reporting line, etc.
- Some places can tell you the dollar value of the full benefit package as a percent of salary, which is useful if you're comparing offers.
- Working from home one day a week is pretty common. Just to keep options open I'd ask about the option to work an adjusted schedule like 7-4 (to help with the commute) or working four 10 hour days if you think you'd have any interest. If they agree you can do these things it doesn't mean you have to, you just have more choices when the time comes.
I am a recruiter - here is what I advise.
It does not hurt to negotiate anything up front--in my experience the most negotiable thing will be salary. Most companies build in "wiggle room" with their initial offers.
Benefits are much harder to negotiate. Paid time off usually increases with tenure in the company.
Telecommuting is becoming much more common. I would first ask about their policy. Some companies let you telecommute 1 day a week right away. Others will want you to prove your reliability prior to granting it.
Please keep in mind that when you are negotiating these things, make sure you say something to the effect of " I am happy to receive the offer" and then start the negotiations. As an HR professional, I always appreciate that approach.