My job made me an independent contractor, what does this mean for me?

wyosamRN · Nov 5, 2010

I don't know what it means specifically to nursing, but it can mean no workers comp, more taxes, and other issues. I'd look into it deeper and you almost certainly should get more money (they are spending less overall on you, so wage should be higher)

One2gofst · Nov 5, 2010

It means a few things. You will receive a 1099 rather than a W-2. You will pay self-employment tax. You will receive no 401(k) (403(b) since it is a nonprofit). You will be responsible for your own health insurance and other insurance you formerly had through your employer.

Basically, it saves them money. Unless they are paying you a higher salary, you, in effect, took a cut in compensation. However, they can't just do this without telling you. I don't know everything about the legalities, but it might not be a bad idea to talk to an employment attorney.

caliotter3 · Nov 5, 2010

Look at your paycheck stubs to make sure they are no longer taking out the taxes and other legal deductions. You are now responsible for paying quarterly estimated taxes, your social security tax deduction, etc. Go to a tax place, like HR Block or a CPA, to find out what you need to do and to give you help. Also check with the IRS. They have informational brochures on the subject. You will most likely find out from reading this information that you are really an employee and not an independent contractor.

Altra, BSN, RN · Nov 5, 2010

You should consider seeing your tax/financial advisor immediately. There are some major implications.

1. They are likely no longer withholding any taxes for you. At the end of the year you will receive a W-2 with any wages they paid you while you were still an employee, but your wages for the rest of the year will be on a 1099. You are responsible for paying federal, state, and local income taxes.

2. They are no longer withholding Social Security (FICA) taxes for you. Federal law requires 15.3% withheld from wages for social security and Medicare. For those employed by others this is generally split 7.65% from you and your employer pays the other 7.65%. As you are now self-employed, you are now responsible for the entire 15.3%.

3. You are no longer covered under your employer's worker's compensation insurance, nor are you paying into any worker's compensation program that may exist in your state, because you aren't having any taxes withheld.

Here are some websites with some info to think about. See your advisor immediately. Good luck to you.

http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

http://www.ssa.gov/pubs/10022.html

Neveranurseagain, RN · Nov 5, 2010

You first need to find out if legally you can be an independent contractor or if you are still considered an employee. Just because they want you to be an independent contractor does not mean it is legal. Here are a couple of websites to determine if you are indeed an employee or an independent contractor:

http://www.comptroller.ilstu.edu/downloads/20-factor-test-for-independent-contractors.pdf

http://www.irs.gov/pub/irs-utl/emporind.pdf

mappers · Nov 5, 2010

It is probably illegal as well. There are some pretty strict standards on who qualifies to be an "independent contractor." If you are required to be on the job for specific periods of time, use their equipment and don't have to provide your own, can't "come and go" as you please, didn't set your hourly rate, you aren't an independent contractor and they are breaking the law.

For example, a plumber is an independent contractor. He or she sets the time of when they will do the work, how long they will work, sets his/her rate, brings own equipment, etc. A person who "consults" for a company, who signs a contract for a limited time to do a specific task, is not required to work a certain number of hours, etc, can work from home, sets his own rate and bills the client, etc. is an independent contractor.

If you are required to be on the job form time A to time B and on certain days, etc. do what they tell you to do, follow their policies, then you are not an independent contractor.

You end up paying a bunch of taxes that they are required to pay. Sure it saves them money.

Altra, BSN, RN · Nov 5, 2010

OP, just curious ...

So how did you discover that you are no longer an employee?

I'm guessing that you did not receive health insurance or other similar benefits to begin with, or the loss of insurance coverage would have given you a heads up sooner.

Was there no change in your paycheck? It seems unlikely that your net check would remain the same if they are paying you the same rate but not withholding any taxes.

You are also not accumulating any vacation time or sick time.

Let us know how this works out.

caliotter3 · Nov 5, 2010

If it turns out that they are messing around with you without having informed you and getting your acknowledgement, I would seriously consider finding a new employer. Why should you have to pay their portion when in fact you are still an employee as far as the IRS is concerned? Find an ethical firm to work for.

dehen13 · Nov 5, 2010

Thanks everyone for the responses! I am 100% sure that I am an employee! And a dang good, hard working one at that. This company does not provide any insurance, benefits, overtime,ect. anyway but I sure as heck do not want to be paying so much more on my taxes. I am afraid to talk to them about this cause it may mean my job, but I have to look out for myself right?

Altra, BSN, RN · Nov 5, 2010

OK, now I'm confused -- you're 100% sure that you're an employee? So ... then where did you get the idea that you're an independent contractor?

OP - you need to see a tax professional, immediately. Believe me, next April 15 will be a shocking, life-changing experience if you don't.

dehen13 · Nov 5, 2010

They started giving me a paycheck instead of direct depositing my pay. I didn't really think twice about it at the time but grew tired of going to the bank so often, only twice a month but still =). I guess they seemed bigger but I never complained about to much $.I asked if they could go back to direct deposit and then the new office lady spilled the beans. They do not offer vacation time, sick time, holiday pay or anything like that. I do love my job there and hate to lose it over pay