The company I currently work for states that each of its staff are hired on as "independent contractors," and as part of being able to work for them we each had to set up our own companies at our own expense. However, we are not treated as independent contractors, in my opinion, and I was wondering if what they were doing was illegal, or just bad form. We are required to purchase uniforms with company logos (not our own companies, however) and wear those ONLY while working. The company provides the office space and equipment with which to complete our jobs. We are required to attend weekly staff meetings. We are paid by the hour and have regularly scheduled "pay-days."
While doing something independently, on my own time, I displeased the owner of the company and have been put on a suspension, and will likely lose my job. My question is: is he doing anything illegal here? Or is he just taking advantage of the system to avoid paying taxes, social security, unemployment benefits etc? Also, is THAT legal? Thank you!
Answer
As a Franchise Attorney I can say the following. Many employers attempt to evade their employee tax obligations by doing what you outline. It only works until someone complains and they are audited by the IRS or state tax authority. Contact your local employment development or labor department and IRS to let them know what's happening. Consult with a good business or franchise attorney in your area for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation
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