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Old 05-16-2010, 10:31 PM   #1
dsmawd350
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Default hourly pay + 1099 = illegal ???

Hope some of you older experienced people on here can add some good info for me.

Just as some back info I was doing custom hardwood floors for nearly 3 yrs. for 2 yrs i was making $22/hr as an emplyee. at a later point they forced us all to become 1099 subcontractors and our pay increased to 33/hr as a base pay for patch work repairs etc, but we were payed by the job/square footage.

now up to current, the economy has forced me to go back to doing landscaping which i started learning when i was out of highscool. ( paver patios, retaining walls etc.). The guy i started working for apparently 1099's all his employees and still only pays them 10-12/hr based on experience. I know for a fact that there are dozens of landscaping companies around that pay similar or better wages while being an actual employee with workers comp coverage social security etc. Is it absolutely rediculous for this guy to be paying people those wages and 1099'ing them?

I've also heard it may be illegal to pay that low of an hrly wage to a 1099 contractor because after paying taxes, SS, etc its below minimum wage?
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Old 05-16-2010, 10:38 PM   #2
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Default Re: hourly pay + 1099 = illegal ???

when i was younger i worked for a fab shop, got a 1099 i made 7500 and owed 1500 in taxes!!!!!!! Get some good lube cause ur about to get fucked!
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Old 05-16-2010, 10:39 PM   #3
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Default Re: hourly pay + 1099 = illegal ???

Nothing illegal about it that I'm aware of.
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Old 05-16-2010, 10:42 PM   #4
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Default Re: hourly pay + 1099 = illegal ???

LOL! I used to work for this crooked car dealership in Memphis,fyi the guy who owned it is now in prison,but he used to give guys 10% of the total amount they would let him 1099 for. $5000 for $50,000 and so on.
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Old 05-16-2010, 10:45 PM   #5
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Default Re: hourly pay + 1099 = illegal ???

If you're a sub-contractor, you're working for yourself, not an employee. So they can pay you what they want... It's a loop hole.

Make sure to set 30% aside for taxes of whatever you make. You'll probably want to pay quarterly taxes to take the sting out. You are paying for your own Social Security and unemployment benefits. It's like owning your own company and invoicing your boss.

The good thing about doing this, is that you can write off quite a bit on your taxes. Any personal vehicle mileage (you need to keep a log) to/from your work after you arrive there can be written off.

Unfortunately, it's an employers market, as we've all found out.
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Old 05-16-2010, 10:48 PM   #6
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Default Re: hourly pay + 1099 = illegal ???

Ok, so shouldnt the hourly wage be signifigantly higher for a 1099 sub, than a regular employee? IE this dude is paying me 11/hr as a 1099 when i could go make that as a regular employee elsewhere..
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Old 05-16-2010, 11:02 PM   #7
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Default Re: hourly pay + 1099 = illegal ???

.

1st of all, it's take it or leave it on the pay. As long as they are above minimum wage,
they can do anything they want. As for giving a 1099, unless it's totally different in my business.
I can not give anyone a 1099 that is not set up as a business.
If you don't set yourself up as a business of some kind, he is going to get busted.
Like I said, at least the guys in my business that tried that all got caught,
and had to pay all the taxes and withholdings when they did get caught.
My guys are all subs, they get a 1099, but they must have liability insurance,
they must have a business set up, even if it's just a dba.

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Old 05-16-2010, 11:07 PM   #8
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Default Re: hourly pay + 1099 = illegal ???

Quote:
Originally Posted by mrdragster1970 View Post
.

1st of all, it's take it or leave it on the pay. As long as they are above minimum wage,
they can do anything they want. As for giving a 1099, unless it's totally different in my business.
I can not give anyone a 1099 that is not set up as a business.
If you don't set yourself up as a business of some kind, he is going to get busted.
Like I said, at least the guys in my business that tried that all got caught,
and had to pay all the taxes and withholdings when they did get caught.
My guys are all subs, they get a 1099, but they must have liability insurance,
they must have a business set up, even if it's just a dba.

.
So you're saying a unanimous call to the IRS at the end of the tax year could get me out of paying 1099 taxes. as i never signed a single document, aquirred any liabilty insurance, no business lisc or anything. All he asked me for was a DL# and SS# for 1099 purposes
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Old 05-16-2010, 11:07 PM   #9
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Default Re: hourly pay + 1099 = illegal ???

I think some states have laws so that company don't 1099 workers to avoid Work Comp and unemployment.
If you work more than a certain amount of hours regularly for someone they consider you a employee in some states.
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Old 05-16-2010, 11:11 PM   #10
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Default Re: hourly pay + 1099 = illegal ???

At my flooring job, when becoming a 1099 sub I was required to sit down and fill out tax forms, sign some contracts/ paperwork. and show proof of 1 million dollar liability insurance.

at this job all he asked for was a liscense # and SS# for 1099. He doesnt pay anyone overtime, pays 10-11/hr and has us working 45-60hrs a week. I started this thread because I fell like he is trying to take advantage of his workers and make money off them and not have to pay proper insurance, workers comp, and unemployment. I think hes been getting away with it because his whole crew is composed of kids age 20-25
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Old 05-16-2010, 11:11 PM   #11
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Default Re: hourly pay + 1099 = illegal ???

I went thru this a few years ago while driving wrecker after hours. We were paid on commision and given a 1099. Found out later that as long as we were driving the companys trucks they could not 1099 us.
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Old 05-16-2010, 11:13 PM   #12
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Default Re: hourly pay + 1099 = illegal ???

There are a number of "tests" that the IRS uses to determine whether a person is a legitimate independent contractor eligible for 1099 status, or if they're really an employee. In this particular case, if you are a real IC, you provide your own tools and set your own working hours. If the person paying you tells you when you have to work, or supplies your tools, then you're an employee by the IRS definition.

This may help clear it up: http://www.irs.gov/pub/irs-pdf/p1779.pdf
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Old 05-16-2010, 11:19 PM   #13
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Default Re: hourly pay + 1099 = illegal ???

Quote:
Originally Posted by Paul Huizenga View Post
There are a number of "tests" that the IRS uses to determine whether a person is a legitimate independent contractor eligible for 1099 status, or if they're really an employee. In this particular case, if you are a real IC, you provide your own tools and set your own working hours. If the person paying you tells you when you have to work, or supplies your tools, then you're an employee by the IRS definition.

This may help clear it up: http://www.irs.gov/pub/irs-pdf/p1779.pdf
WOW that is great info. I show up to his shop every day at his set start time, use all of his tools, and drive his company trucks to the jobs every day and he pays for gas, supplies, everything. He tells us the hours that we HAVE to work. We were behind from the rain this week and he kept us working a 13 hr day on a friday i clocked out at 8:49 pm
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Old 05-16-2010, 11:24 PM   #14
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Default Re: hourly pay + 1099 = illegal ???

Quote:
Originally Posted by dsmawd350 View Post
WOW that is great info. I show up to his shop every day at his set start time, use all of his tools, and drive his company trucks to the jobs every day and he pays for gas, supplies, everything. He tells us the hours that we HAVE to work. We were behind from the rain this week and he kept us working a 13 hr day on a friday i clocked out at 8:49 pm

You are definately not a subcontractor(no 1099). You should get this straightened out soon.
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Old 05-16-2010, 11:25 PM   #15
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Default Re: hourly pay + 1099 = illegal ???

http://www.barecruiters.com/irs_rules_%20for_1099.htm
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