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Irwin Law
Irwin Law, Attorney
Category: Business Law
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Experience:  30+ yrs. representing small business, real estate, probate
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I have a problem with one of the clients of my bookkeeping

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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.

Hello and thanks for submitting this interesting question. Partner 2 cannot be enjoined from future conduct - nobody can. As you say yourself, she has broken no laws. A cease and desist letter from an outside contractor to a full partner in a business would have no legal significance. It sounds like she has a serious personality disorder that might even get worse. Therefore, you have only two choices. Either continue to work with Partner 1 and bite the bullet with P2, or quit the relationship until P1 attains full control over the business and can give you a written contract. I wish you the best in this difficult situation.

I hope that this information is helpful. Please click on a smiley face so that I will be compensated for assisting you. If you have a follow up question please send me back a Reply without entering any rating. Also, be sure to verify this information with a local attorney who is familiar with your local laws and procedures. Thanks again for using Pearl.Com- Just Answer. Your business is appreciated.

 

Customer: replied 3 years ago.

Thank you for the information. It's not encouraging, but it is as I suspected.


There is no question that I will not be doing anymore work for either partner. I will also have a signed contract before working with every client in the future.


 


Partner 2's pattern is to not let go of any argument and belabor even the smallest point. Having provided my W9 and UBI, am I legally obligated to response to her emails arguing I am not an independent contractor or any other topic?

How could it be to the benefit of their company to have you as an employee rather than an IC? From the way you describe your work, you are anything but an employee. It appears that you are dealing with a seriously disturbed individual. It's probably due to her illness and the medication. Whatever the cause, you are under no legal obligation to respond to her in any way.
I hope this Answer is helpful and that you will give it a positive rating. If you have any follow up questions please send back a Reply. You should consult a local attorney to verify that this information is accurate for your state. Thank you for using Pearl.com- Just Answer. We appreciate your business.
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