I have a problem with one of the clients of my bookkeeping business
. The client business is an California LLC
owned and managed 50/50 by two siblings. I have only worked for them for 2 months, but there has been animosity and major business disputes between the partners and their adult children for years. I landed in the middle of it.
Partner 1 hired me as an independent contractor after a long series of detailed emails discussing their requirements, my qualifications and the changes I would make to improve and modernize their bookkeeping/office admin methods. Partner 2 was copied on these emails, and approved of hiring me. I am located in WA state, all work is done via the internet, email and phone. Partner 1 has my primary contact and I work very closely with her. We have a very good rapport and we agree on all aspects of the work and the arrangement. We planned to flesh out the outline of my duties that we established in the emails and create a formal contract
once we got fully organized and implemented our new system. We did not get to that point. The prior bookkeepers worked with Partner 1 at her office and were hired as employees.
Six weeks into the engagement, tension between the two partners flared up and there were heated arguments on a number of topics. Partner 2 accused me trying to set company policy without her. There is no truth to this. This is all via emails, I've never met, or even spoken to Partner 2. After two days of hostile, unreasonable emails from Partner 2, I wrote her I would not work for the company anymore because of her behavior. (She is elderly and has cancer. Her behavior has been truly bizarre. I suspect she is suffering from dementia, mental illness or her mental acuity is altered by medications. Of course, I've never said anything like that.) I said I would contact Partner 1 to work out the details of the end of my engagement, returning all company paperwork etc. Partner 1 asked me to work with her alone until my replacement was in place. I agreed and so did Partner 2.
Now Partner 2 is claiming I am not eligible to be an independent contractor because there is no formal written contract. She requested copies of all my invoices from Partner 1. She also asked Partner 1 for my UBI (WA State Business License #/Tax ID) and what sales tax rate I was charging. I submitted a W9 form and documentation of IRS and WA regs that define Ind. Contractor vs employee. I have been in business for 18 years, licensed and filing and paying the appropriate taxes for a sole proprietorship. I believe I meet all the criteria as an independent contractor. There is no sales tax that should be charged on my invoices, especially not to out of state businesses.
I don't believe Partner 2 actually believes I should be classified as an employee. She's just trying to intimidate me and represent Partner 1 as incompetent at hiring. On Friday, she demanded I stop all work until a contract was created. I had 3 or 4 more days of work to do. I was on the phone working with Partner 1 at the time, but stopped working at that point. I have provided all the information Partner 2 has requested. I have been paid in full. I just want the whole thing behind me and Partner 2 out of my life. I'm afraid she's going to create trouble for me with tax agencies, possibly by making false statements. Is there is some action I can take to protect myself from malicious action by her? I'm not aware of any law she has broken that I could cite in a cease and desist letter.