Thank you for your response. Yes, it sounds mighty expensive, thank you for illuminating that. I read EDD’s form DE 231EC and I read your supplied link, thank you. And it appears that in addition to the 18.2% for Medicare and Social Security, there would be the usual deductions for SIT and FIT and also a tax rate for elective UI and DI and possible ETT (which rates I have not yet identified.) Yikes.
Of the qualifying list you presented, 1, 3, 4, 6, 10, 11, 12, and 16-20 apply. 17 and 18 could be mediated by taking on an additional bookkeeping client, which I might be looking for anyway for a little security. Issues 1 and 2 argue for employee status. Issue 3 – the intent is not to avoid taxes, it is just that no workers comp is available and therefore it’s a misdemeanor (as I understand it) for him to continue to have an employee.
I cannot retire, and it would be devastating to lose my job because there does not seem to be a legal way to keep it and retain UI coverage - especially since both the boss and I want to continue to work together. So it would help to know I’ve investigated this thoroughly if you could please clarify a couple of points….
Are you saying that I could be an employee of my own sole proprietorship even if I had no other employees? The difference seems to be in establishing the sole proprietorship, with proper local business licensing, and applying for an employer identification number and EDD account number, rather than just being “ self-employed.”
Will a decision be made at the time I apply for an employer ID number from the Feds and EDD, or elective UI & DI, as to whether or not that alleviates the question of my 1099 status, so that I know clearly that I should either abandon the idea or go forward confidently?
My concern is that if I try to put all of this in place, and start paying into the UI program with the expectation that I am maintaining that protection, and then something happens that determines that the working relationship with the boss (now client) cannot continue, and I then apply for unemployment benefits, could my UI claim be denied because my status as a 1099 employee is denied? If that were to happen it would be too late and I would be job hunting while living in my car at age 67. Thrice yikes!
When I read Section 704.1 (a)(2) of the CUIC, I realized that if I were to establish the elective UI coverage and later make a claim for unemployment benefits, it would be because my work with the boss/client had come to an end – and that would be the equivalent of having discontinued my regular trade. Wouldn’t that invalidate the elective coverage agreement, even retroactively, especially if that occurred in the first 2 years? Not to mention (5) of the same citation – there would never be a net profit from my sole proprietorship if its only income was the amount of my ‘wages’ charged to my boss/client (a factor of my current wages plus 30-40% to cover additional costs) and the only expense was those same additional costs and wages that I paid myself.
I’m not seeing a valid independent contractor with elective UI in this scenario, can you?