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worker in other states
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worker in other states
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We currently operate in several states. The owners would like to take advantage of getting some workers in states in which we do not have licenses. The work is mundate, scripted phone work and they fe
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Forums » Topic Forums » Legal Forum » worker in other states
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worker in other states
posted at 5/5/2010 8:42 AM EDT
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Posts: 94
First: 2/7/2008 Last: 3/21/2011 |
We currently operate in several states. The owners would like to take advantage of getting some workers in states in which we do not have licenses. The work is mundate, scripted phone work and they feel we can get workers at lower wages than we can in the other states. Our primary business is repair and these workers would be helping in either the call center or processing. If we could get these workers as independent contractors, we would prefer that. Can anyone tell me if we use independent contractors for this work, can we do so in states where we are not licensed? |
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worker in other states
posted at 5/6/2010 4:34 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
If they are doing the exact same duties as an employee (under the same type of behavior, management and financial controls), it will be very hard to justify IC status. That is a major red flag. Especially if you are the only company they are working for and they truly have not financial stake in the job.
And the IRS/DOL/states are majorly cracking down on two areas : (1) employee vs IC and (2) exempt vs nonexempt employees. So I tend to lean on the side of being very careful upfront rather than hoping no one will ever make a claim that they should have been classified as an employee! I read one article that stated 60% of ICs are classified incorrectly. It's no wonder the IRS/DOL/states are looking into this becuase they are losing a lot of payroll tax revenue. And now that unemployment is high, more of those incorrectly classified ICs are applying for unemployment -- which can open the can of worms. And I doubt the wages the employer will save will ever make up for any penalties associated with this. And if you do it legally by classifying them as employees in each state, the admin time of all the extra tax forms alone would cost more than the savings in wages. |
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worker in other states
posted at 5/6/2010 8:42 AM EDT
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Posts: 94
First: 2/7/2008 Last: 3/21/2011 |
I had already determined that these would not classify as ICs since we will be directing what the do and how they do it. I informed the owners that they would be employees. That being the case, since they will be employees working from their homes, I would imagine that it will require that we have a license in whatever state they reside since they will be taxed in that state, even if they are teleworking to and accessing the computers/network in our headquarters in CA. Would that be an accurate assessment? |
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worker in other states
posted at 5/6/2010 9:56 AM EDT
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Posts: 2146
First: 2/15/2006 Last: 9/14/2011 |
Very accurate...and there are certain states that there is no way I would want to do basic payroll, much less other labor law (CA, PA, MA, etc). Not only would there possibly be state tax issues (income, unemployment, disability, etc) but all possibly county/city issues. And all those generally require some type of payroll/tax reporting.
However I could possibly still make the argument that the admin time is going to be more than the decrease in wages. |
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