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socrateaser
socrateaser, Lawyer
Category: California Employment Law
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Experience:  Retired (mostly)
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I was labelled as an "Independent Contractor", which I signe

Customer Question

I was labelled as an "Independent Contractor", which I signed after 2 months of W-2 employee with staffing agency. I got a separate Tax ID from IRS through Internet as a proprieritory corp ( I am the only one in this corp). The following terms are in the contract. 1. Is this statement legal? 2. If this statement is legal, is there any way that I can penalize them for late payment? (See the below for the payment history. Last column is the pay trend.) 3. What is best way that I can collect my money fast? ( I was a computer consultant until 5/15/2011.) 4. Is there "overtime" rate for independent contractor? Payment terms. For the services provided by Subcontractor, SoluGence agrees to pay Subcontractor the fees agreed upon in the Professional Services Work Order. Solugence will pay accurate and undisputed Subcontractor invoices on a month-to-month basis by the later of (a) 15 business days after receipt of payment from Customer for such Services, or (b) within 45 days after receipt of Subcontractor invoice if such invoice is received after receipt of payment by Customer. Solugence willnot pay for any invoice submitted by Subcontractor that is over 90 days from the service. In the event Customer withholds payment with respect to a Professional Services Work Order for any reason, Solugence shall have no abligation to pay Subcontractor unless and until Solugenc is first paid by Customer. Invoice # XXXXX Dates Invoice Date Paid Date # XXXXX Days Elapsed 2010-1101 11/1 - 11/15 11/15/2010 12/23/2010 38 Days 2010-1102 11/16 - 11/30 11/30/2010 01/10/2011 40 Days 2010-1201 12/1 - 12/15 12/15/2010 01/25/2011 40 Days 2010-1202 12/16 - 12/31 12/30/2010 02/10/2011 41 Days 2011-0101 1/1 - 1/15 01/15/2011 02/18/2011 44 Days 2011-0102 1/16 - 1/31 01/31/2011 03/14/2011 42 Days 2011-0201 2/1 - 2/15 02/15/2011 04/05/2011 49 Days 2011-0202 2/16 - 2/28 02/28/2011 04/20/2011 51 Days 2011-0301 3/1 - 3/15 03/15/2011 05/13/2011 59 Days 2011-0302 3/16 - 3/31 03/31/2011 06/03/2011 64 Days 2011-0401 4/1 - 4/15 04/15/2011 06/23/2011 69 Days 2011-0402 4/16 - 4/30 04/30/2011 2011-0501 5/1 - 5/13 05/13/2011 Note: Received Signed contract on 5/18/2011

 

For your information, Solugence is staffing agency. Customer above is HP.

Submitted: 3 years ago.
Category: California Employment Law
Expert:  socrateaser replied 3 years ago.

1. Is this statement legal?


A: Probably not. The question of whether a worker is an employee or an independent contractor is resolved primarily by determining who has the right to control the manner and method by which the worker undertakes its labor. A worker who is free to perform work in whatever manner he/she chooses, and who is only responsible for the end product may be an independent contractor. However, where the worker's role is such that it is a core part of the contracting party's business, the worker may be an employee, because it is simply impossible for the contracting party to avoid control over the worker's manner and method of performance.

 

Your facts suggest that there is a third party intermediary whose business is apparently to do nothing more than to supply a worker -- however, the supplier controls the worker's payment. A worker who is not in control of his/her own billing, is clearly subject to the control of someone else. Thus, on your facts, you appear to be an employee of "SoluGence."


2. If this statement is legal, is there any way that I can penalize them for late payment?


A: File a wage claim with the Division of Labor Standards Enforcement. And, you can file a form SS-4 with the IRS. If the IRS finds an employment relationship, the penalties may be extreme enough to put he staffing company out of business.

 

3. What is best way that I can collect my money fast? ( I was a computer consultant until 5/15/2011.)


A: Unfortunately, the only way to force payment "fast" would be to commit criminal extortion, and threaten to file a wage claim with the DLSE, if you're not paid immediately. So, it may be better to simply file the wage claim and get it over with.


4. Is there "overtime" rate for independent contractor?

 

A: Assuming that you are an independent contractor (which I seriously doubt), then "no," there is no overtime. You would be entitled to no more and no less than what is provided for in your contract. However, if you are found to be an employee, then the ordinary overtime laws apply (time and one half for more than 8 hours per day, unless you are found to be a salary-exempt employee -- which is possible, but dependent upon a host of other facts, which are out of scope of your original question).

 

Hope this helps.

 

 


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!


 

Customer: replied 3 years ago.

I should clarify more about the subcontract agreement. Here is the head of the contract.

"This SUBCONTRACT AGREEMENT ("Agreement" or Subcontract Agree ment") is efffective between Solugence, Inc., a California Corporation and JaiCom a CA corporation.

 

I have signed as an owner of "JaiCom", which has separate Tax ID as a sole proprietary corp - my social security number any more.

 

With this being said, is your answer still valid?

Expert:  socrateaser replied 3 years ago.
Do you pay yourself W-2 wages as an employee of JaiCom?
Customer: replied 3 years ago.
No. I filed 1040 and attached schedule C with social security number and EIN in D.
Expert:  socrateaser replied 3 years ago.
Okay, I'm confused.

Who is the payee on the Solugence checks -- you or JaiCom?

If to JaiCom, then is that a registered corporation, or just an FBN/DBA?

Customer: replied 3 years ago.
I am self-employed. As I said in the original statement, I got Federal Tax ID through IRS web site. This is all I did. The payee on the Solugence checks is "JaiCom".
Expert:  socrateaser replied 3 years ago.
Thanks. My original answer remains the same. The fact that the contract listed your business in a manner that does not actually represent the legal relationship of the parties shows that the contract is probably unenforceable to the extent that it pretends to create an independent contractor relationship, rather than an employment relationship.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

Customer: replied 3 years ago.

In fact, I initiated and asked the possibility of changing the relationship from employee to independent contractor. It seems that they are welcomed my suggestion for this realtionship changes. I don't think this does not matter. Am I right?

Expert:  socrateaser replied 3 years ago.
It's actually not particularly important. Employers are responsible for misclassifying their employees -- regardless of what the employee may offer -- because the employer is presumed to have more knowledge about employment law than does the employee.

Hope this helps.


And, if you need to contact me again, please put my user id on the title line of your question (“ToCustomerrdquo;), and the system will send me an alert. Thanks!

socrateaser, Lawyer
Satisfied Customers: 34867
Experience: Retired (mostly)
socrateaser and other California Employment Law Specialists are ready to help you
Customer: replied 3 years ago.
Thanks.
Expert:  socrateaser replied 3 years ago.
You're welcome and good luck.
Customer: replied 3 years ago.

File a wage claim with the Division of Labor Standards Enforcement. And, you can file a form SS-4 with the IRS. If the IRS finds an employment relationship, the penalties may be extreme enough to put he staffing company out of business.

 

Above is your second answer for my very first day question. Is form SS-4 above correct? When I click the link, it comes out with SS-8.

Expert:  socrateaser replied 3 years ago.
Sorry -- typo. SS-8 is the correct form.

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