How to stay a Indie. Contractor?
March 13, 2007 3:04 PM   Subscribe

I have been freelancing as TV producer for one company for over 6 months now working on various projects. The boss thinks he needs me to stand down for a few weeks to keep my independent contractor status. All of the IRS info I have found is vague on the point of continuous employment. How long will I have to stand down (aka take the vacation I want to take) before I can return to this company? And legally how long is too long to be a contactor for one company (when does the IRS question contractor vs. employee)?
posted by mcbietila to Work & Money (12 answers total) 1 user marked this as a favorite
The guidelines don't really have much to do with how long you've been working for a particular company, but rather hinge on what sort of control the company has over your work.

In my experience, companies hiring contractors fall into two easy-to-determine groups:

a) real contracting relationships (contact a company, give them a job, get a result back, pay for it)
b) bullshit contracting relationships (you work here, from 9-5 every day, with our computer, and we tell you everything to do, but we also don't feel like paying employment taxes, so we'll call you a contractor instead of an employee)

Usually it's very easy to see which group is which.
posted by jellicle at 3:13 PM on March 13, 2007

I have no concrete information, but I know people that have been contracting for a single company for over two years. I have no idea what their employment contract details are though.
posted by FlamingBore at 3:14 PM on March 13, 2007

Microsoft was retaining workers on contract for years. Google for microsoft contractor "orange badge" to see all angles on the issue.

From Angered over Microsoft’s indefinite use of their services in the 90s, a group of temporary workers at Microsoft filed a class-action lawsuit against the company on the grounds that it was withholding full-time benefits and pay while working them like full-time employees. Their case was good, because in the early 90s, Microsoft had admitted to the IRS that it had misclassified a number of employees as temp workers when they should have been cited as full-time workers. After more than a decade of legal wrangling, the dispute ended in 2002 with Microsoft agreeing to pay more than $97 million in damages and legal fees. Microsoft will now only retain contractors for one full year, followed by a 100 day 'vacation' until they can be rehired on contract.

IANAL nor a tax expert. But I will guess that your client is not required to cut you loose without pay to retain your contractor status, but doing so ensures the relationship continues to look good to the authorities.
posted by ardgedee at 3:30 PM on March 13, 2007

I know an organization that used to do this. I believe they made people take about six weeks off after about six months. However, they've recently accepted that those workers are employees and started paying FICA and Fed tax for them. I think it's generally up to the workers in a situation like this to challenge or report it though.
posted by crabintheocean at 3:39 PM on March 13, 2007

You can boost your legitimacy as a contractor if you make it clear that you are offering your services to the general public. Do you have a website or business cards? Have you done any work for anyone else? Those things can make it clear that you are a contractor.

One question though: do you want to be a contractor or an employee of this company? Do you care? Why do they want you to be a contractor? Answers to these questions might actually help people answer your question appropriately.
posted by alms at 3:40 PM on March 13, 2007 [1 favorite]

If you fall into the "quasi-employee" category that is being paid as a contractor, I don't think a several week vacation will make a difference.

I'm also a freelance TV producer and I'd suspect that this is more budgetary related, then Uncle Sam related.
posted by donguanella at 3:49 PM on March 13, 2007

BTW Sometimes employment laws can be different for the TV and Movie industries just because of the more transient nature of these industries.

On another note, if this is a long term thing (and for real) you may be able to get around this by incorporating (plus some other benefits). This way they pay your company and not you.
posted by bitdamaged at 3:54 PM on March 13, 2007

IANAL, but I work as a freelancer in film and TV, and have worked as an independent contractor for YEARS for the same companies (what would be full time if I was an employee), and it's never mattered.

posted by MythMaker at 4:21 PM on March 13, 2007

The things that make you a contractor, including but not limited to what's in the IRS pamphlet above:

* You work using your OWN equipment, and under your OWN guidance (i.e. your employer tells you to execute a task, but does not tell you HOW to execute that task.) Specifically, the business does NOT provide training in how to do your job. If you've ever attended a training class paid for by your employer, you are NOT an independent contractor.
* Your empoyer does NOT reimburse you for expenses, such as travel or equipment expenses.
* You offer those services to the general public on a regular basis -- i.e. you have or will accept other clients than your current employer.
* You advertise or market yourself to the general public. (Usually, marketing or having business cards advertising yourself as a contractor is the test for point #2.)
* You pay and/or charge appropriate business taxes, which in my state includes sales tax for computer work of various types and franchise tax because I'm incorporated.

If you fail any of these tests, you are an employee and both you and your employer will fail a federal or state audit.

(I'm not a lawyer, tax expert or CPA, but I have been an employer.)
posted by SpecialK at 5:09 PM on March 13, 2007

SpecialK, perhaps those are the guidelines in your state, but the IRS allows for companies to provide their contractors with equipment, training, and travel-expense reimbursements (all subject to reasonable restrictions). There is no requirement that a contractor market his or her services to the general public. See this IRS training manual for details.

mcbietila, I think donguanella nailed the real reason for the forced stand-down, but it may also be a best practice to avoid even the appearance of an employee relationship.
posted by backupjesus at 6:19 PM on March 13, 2007

This Media Communications Association site seems to have a very comprehensive discussion of this topic for the film and video industry.
posted by rintj at 9:18 PM on March 13, 2007

Response by poster: Great suggestions. Here is some more info on my situation: I am the first freelancer my boss has hired for more than a day and he is nervous since his production company has really taken off this year-- and he is becoming much more than a one man band. I would say that our relationship is in the quasi-freelance category but that is the norm in my industry. I have worked for about three other production companies last year so I think that looking at the taxes i just filed I look like a typical indie contractor. The question of me wanting to continue this relationship and become an employee I'm torn but I don't think that will ever be presented as an option. Thank you all!

I think I will take two weeks down and also quote a higher day rate using the rational that it will help avoid the appearance of an employee relationship since the rate would be different for separate project.
posted by mcbietila at 9:02 AM on March 14, 2007

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