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A few years ago my son was hired for his first job out of college to work in the IT department of a large Boston company.

"Mom, there's a pool table in the lobby! They throw us paintball parties, pot luck parties and take us out for beer and pizza on Fridays after work!"

 They also verbally promised him a trial period of 9 months, then full time employment with benefits. Excellent evaluations didn't help when he and most of the rest of the IT workers were outsourced 8 months later.

The Obama administration is pushing back on these corporate cheaters. Via the New York Times

Many workplace experts say a growing number of companies have maneuvered to cut costs by wrongly classifying regular employees as independent contractors, though they often are given desks, phone lines and assignments just like regular employees. Moreover, the experts say, workers have become more reluctant to challenge such practices, given the tough job market.

UPDATE: Catte Nappe  points out a recent diary that links a note left by the pilot of the Austin plane crash to an IRS code on contract workers.

SECOND UPDATE (getting weird here, folks): The suicide note has been deleted by the government,  but can be found at The Smoking Gun.

Companies that mislabel employees as contractors or college students working in co-ops save big bucks with no obligation to pay Social Security, Medicare, or unemployment insurance.

The Chamber of Commerce is getting a case of the vapors about this terrible threat ~

"The goal of raising money is not a proper rationale for reclassifying who falls on what side of the line," said Randel K. Johnson, senior vice president with the United States Chamber of Commerce. "The laws are unclear in this area, and legitimate clarification is one thing. But if it’s just a way to justify enforcing very unclear laws against employers who can have a legitimate disagreement with the Labor Department or I.R.S., then we’re concerned."

 Anybody here showing up at work every day, with a desk, phone and computer, but no benefits or job security?

More from the Times article:

   The Obama administration plans to expand investigations by hiring 100 more enforcement personnel. The I.R.S. has begun auditing 6,000 companies to see whether they are in compliance with the law.....

   "This denies many workers their basic rights and protections and means less revenues to the Treasury and a competitive advantage for employers who misclassify," said Jared Bernstein, who as executive director of Vice President Joseph R. Biden Jr.’s Middle Class Task Force has helped orchestrate the administration’s campaign against misclassification. "The last thing you want is to give a competitive advantage to employers who are breaking the rules."

   A Harvard study found that 4.5 percent of Massachusetts workers were misclassified, while a Cornell study concluded that 10 percent of New York’s private-sector workers were.

Jim Ansara, Founder and Chairman of Shawmut, is a firm believer in Financial Bootstrapping
(a.k.a. outsourcing) - here's one of his more lame suggestions:

    7. Outsource Administrative Functions

Consider outsourcing payroll, bookkeeping and other administrative services – This is a common practice. A good firm has the experience and can probably do the work much more easily and cheaply than you can. is a Web-based business directory providing information and free tools for suppliers and buyers of outsourcing services. Organizations such as the Sunday Project provide staff either to complete temporary projects or for general administrative support. Another strategy is to share this back office support with other nonprofit organizations. Click  here to read about how one Minnesota organization, MACC Commonwealth, has followed this strategy.

Outsourcing computer-related work can be more economical than hiring someone full-time – Organizations like oDesk enable buyers of services to hire, manage and pay technology service providers from around the world (i.e. web developers, server administrators, database administrators, etc).

IT outsourcing is a $4 billion industry a year industry, and companies have sprung up to assist in the implementation, such as and Outsourcing has become the predominant choice for major corporations in America.

Thank you, President Obama and Vice President Biden for working to keep America strong!

Originally posted to Sprinkles on Thu Feb 18, 2010 at 06:58 AM PST.

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  •  Tip Jar (340+ / 0-)
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    If you only have a chainsaw, you tend to see every tree as a problem.

    by Sprinkles on Thu Feb 18, 2010 at 06:58:52 AM PST

  •  Businesses love high unemployment... (54+ / 0-)

    Because it keeps their employees scared and much less likely to raise any stink about their shady practices.  It pits worker against worker in a race to the bottom - who can do more for less in order to save their job.  

    The Obama Administration might be blocked by the Senate from doing a lot of things, but enforcing existing rules and laws could go a long way to make changes that corrupt politicians and their lobbyists bribes don't want.

    I wonder what Ct. Senate candidate Linda McMahon would feel about this issue considering the wwe classified all wrestlers as independent contractors to skirt these very same employment laws.

    Politics is like playing Asteroids - You go far enough to the left and you end up on the right. Or vice-versa.

    by Jonze on Thu Feb 18, 2010 at 07:10:47 AM PST

  •  Sigh (24+ / 0-)

    What a pity the rabid teabaggers never seem to go after targets like the outsourcers, who do far more damage to them than any of the (mostly imaginary) governmental demons they howl against.

    Dude, your statistical average, which was already in the toilet, just took a plunge into the Earth's mantle. ~ iampunha

    by ETF on Thu Feb 18, 2010 at 07:11:32 AM PST

  •  This seems to be muchmore common (18+ / 0-)

    I've  noticed a large uptick in companies offering jobs  only as 1099 contractors. Good for President Obama.

    "Everyone is entitled to his own opinion, but not his own facts." Daniel Patrick Moynihan

    by atlliberal on Thu Feb 18, 2010 at 07:12:02 AM PST

  •  I've got plenty of criticisms of the (17+ / 0-)

    Administration when it comes to policy choices, but outside of the Financial sector and the "Security" front, they've done a damn fine job of putting grown ups back in charge and begining to restore the Rule of Law.

    "If you have to wave dead babies in the air to make your point, you haven't got one" My Mom

    by JesseCW on Thu Feb 18, 2010 at 07:21:41 AM PST

  •  NYT... (30+ / 0-)

    ...said this is the largest crackdown by ANY administration.

    Will this be discussed by the MSM? No. Most blogs? Probably not.

    Thanks for spreading the word.

    I am the invisible man

    by SpaceJunk on Thu Feb 18, 2010 at 07:27:03 AM PST

    •  100 inspectors isn't much of a crackdown (4+ / 0-) could ad on a couple zeros to the number of inspectors and have them pay for themselves through fines and settlements with offending companies....

      I'm a part of the reality-based community, not the personality-based community.

      by Uberbah on Thu Feb 18, 2010 at 08:37:07 AM PST

      [ Parent ]

      •  Perhaps that will be part of the plan.... (4+ / 0-)
        Recommended by:
        askew, Nina, Dirtandiron, proud2Bliberal

        Give Obama a chance to see how this part goes. They have already started after the tax evaders in Swiss banks. Step by step, he's serving notice...


        by CuriousBoston on Thu Feb 18, 2010 at 08:47:21 AM PST

        [ Parent ]

        •  past that now, sorry (0+ / 0-)

          Give Obama a chance to see how this part goes.

          Obama used up his "give him a chance" points with me a long time ago.  He only gets new points for results, not more rhetoric.

          Which is not to say that this isn't a good move, I just wish it was a larger one, like telling the DOJ to back off state-based medical marijuana.

          I'm a part of the reality-based community, not the personality-based community.

          by Uberbah on Thu Feb 18, 2010 at 09:26:38 AM PST

          [ Parent ]

          •  Absolutely - I want action from Obama (1+ / 0-)
            Recommended by:

            I am so tired of his bullshit I could scream.  "Bipartisanship" means "I can't deliver on shit"

            Bill the Butcher was right. I am a nativist, and that is a progressive position.

            by numberzguy on Thu Feb 18, 2010 at 09:52:51 AM PST

            [ Parent ]

          •  You didn't get your pony yet.... (2+ / 0-)
            Recommended by:
            Aexia, ItsSimpleSimon

            Boo Hooo... there is an action diary up to get Senators to sign a letter to Reid that states they will vote for HCR by reconciliation. Done anything yet? I'd guess no.

            What is the position of each of your Senators on medical marijuana? All of the Reps. in your state?

            I'd guess you don't know.

            The reality is unless you F****ing DO something you won't get your pony. The way communities work, is you get together, get one thing done, then, the next, then the next.

            Ummm, who is the DOJ in charge of this? Did you write a diary, with names and phone numbers, copies of your emails? Answer=NO.


            by CuriousBoston on Thu Feb 18, 2010 at 10:38:17 AM PST

            [ Parent ]

            •  pathetic straw man, always has been (1+ / 0-)
              Recommended by:
              Kitsap River

              You didn't get your pony yet....

              Feel free to stop lying at any time.  This isn't about what Obama hasn't had time to do, and never has been.  It's about what he has had time to do, but you knew that already.

              I'm a part of the reality-based community, not the personality-based community.

              by Uberbah on Thu Feb 18, 2010 at 11:28:44 AM PST

              [ Parent ]

              •  Have you read the list of executive orders? (1+ / 0-)
                Recommended by:

                He's trying to do as much as he can without the Senate. The House has passed about 60 bills that are sitting in the Senate.

                Bills that have already passed, like the Stimulus Bill, need Obama and Biden to go around the country so voters know who voted FOR those bills.

                His list isn't in the same order as your list. Too bad. I'd like that, too. I'm going to need it as cancer recurs.

                It's something a lot of people can handle privately, or WORK in their own state to make a law stating amounts for private use is not a crime-MA.
                Have you worked on that?


                by CuriousBoston on Thu Feb 18, 2010 at 12:09:00 PM PST

                [ Parent ]

                •  what part of "straw man" do you not understand? (0+ / 0-)

                  Have you read the list of executive orders?


                  He's trying to do as much as he can without the Senate. The House has passed about 60 bills that are sitting in the Senate.


                  Just how obtuse are you, really?  It's not about what Obama hasn't had time to do, it's about what he has had time to do.  And that doesn't mean going all "unitary executive".

                  I'm a part of the reality-based community, not the personality-based community.

                  by Uberbah on Thu Feb 18, 2010 at 03:15:44 PM PST

                  [ Parent ]

                  •  Sigh (0+ / 0-)

                    It's about what he can do with the support he has, and the opposition he has, and the list of controversial things he has to do.

                    It's quite possible for people to grow their own, and not be discovered, if they have half a brain.

                    The raids should not be happening. Are you connected with a group? Have they got in touch with the ACLU? Have the raids been increasing? Decreasing? Is there some state asshole that needs to be out of a job?

                    I'm asking because I don't know. Maybe he has decided to leave it up to the states. Has he stated this somewhere, do you know. I do know that clinical trials are going on, here and in England. maybe he is waiting for the papers to be published-I read of a presentation-very favorable-given at a medical meeting. Medpage is the site, you can search there.


                    by CuriousBoston on Thu Feb 18, 2010 at 04:11:23 PM PST

                    [ Parent ]

        •  No, I don't want to wait - I want action (1+ / 0-)
          Recommended by:

          Obama is a political idiot.  He has no idea how to get anything done.  He's a one-termer.

          Bill the Butcher was right. I am a nativist, and that is a progressive position.

          by numberzguy on Thu Feb 18, 2010 at 09:53:35 AM PST

          [ Parent ]

          •  You have read the list of Obamas Exective Orders? (2+ / 0-)
            Recommended by:
            Aexia, Dirtandiron

            Political idiot? I don't think so. If you want action, be part of the action you want. I'll bet you cannot recall from memory your federal and state reps, and all the federal reps in your state. I'll bet you don't know the name of one staffer in any of those offices.

            Please GRAB A MOP, or zip it, respectfully.


            by CuriousBoston on Thu Feb 18, 2010 at 10:44:43 AM PST

            [ Parent ]

            •  Can you cite us the one halting DADT? (0+ / 0-)

              Oh, wait, you can't?  You know, the order that could have prevented 400 gays from being discharged since he took office?

              I'm a part of the reality-based community, not the personality-based community.

              by Uberbah on Thu Feb 18, 2010 at 11:30:38 AM PST

              [ Parent ]

              •  One gay is back in, two very high level (1+ / 0-)
                Recommended by:

                military support, the wheels are turning. That is in progress. It's reasonable to get the support of the military before he signs the executive order.

                Executive orders can be repealed by the next President. If he has a buy-in from the military, he can put it in the next military appropriations bill. It would pass without Republicans causing a problem, because the military has publically bought back a very publicized case, which will be the first of many.

                A law is harder to overturn than an executive order.


                by CuriousBoston on Thu Feb 18, 2010 at 12:14:55 PM PST

                [ Parent ]

                •  which does *what* to change the fact... (0+ / 0-)

                  ...that Obama could have signed an EO halting DADT the moment he took office, and chose not to.  Instead, he's become a "fierce procrastinator and buck passer" by leaving the issue to Congress.

                  Executive orders can be repealed by the next President.

                  ...except Obama had no problems signing an executive order reversing the abortion gag rule.

                  A law is harder to overturn than an executive order.

                  And what would have made passing a law a lot easier?  If the homophobic arguments had already been debunked in advance of Senate deliberations.  What would have debunked homophobic arguments?  Years of open, honorable service from gay personnel in the U.S. military.

                  I'm a part of the reality-based community, not the personality-based community.

                  by Uberbah on Thu Feb 18, 2010 at 03:25:43 PM PST

                  [ Parent ]

                  •  The gag rule applied to monies given (0+ / 0-)

                    to the UN, for clinics overseas. The abortion ruckus that two Democratic Senators have made has slowed the HCR bill for months, and added ridiculous compromises.

                    It's clear Obama wants DADT in a bill. I don't know when the next military appropriations bill will be, or if now it will be in the budget. I don't even know if any part of his budget will be online. Perhaps one of your Senators or Reps from your state are on the Armed Forces, or Budget Committees, and can give you more information.

                    It is clear that there is progress on this. I don't know where to find information about GLBT being tossed out of the military. Do you know the last date that happened?


                    by CuriousBoston on Thu Feb 18, 2010 at 04:01:39 PM PST

                    [ Parent ]

        •  That is why the puppet masters are riling up the (1+ / 0-)
          Recommended by:

          teabaggers. They are pissed that they have to follow the law.

      •  Put the inspectors on commission (2+ / 0-)
        Recommended by:
        Uberbah, Dirtandiron

        Incentivize them to perform better and go after the larger violators.

        Perhaps we could even sell the right to be a commissioned inspector...

        (-7.38,-2.51) 76% of dKos readers think I'm a secret wing-nut operative!

        by Gustavo on Thu Feb 18, 2010 at 09:40:36 AM PST

        [ Parent ]

        •  Have you looked at the USAJOBS site? (0+ / 0-)

          It would take legislation to do that. The House has passed over 60 bills the Senate Republicans and DINOs are sitting on. This is only way Obama could get this started.


          by CuriousBoston on Thu Feb 18, 2010 at 12:18:54 PM PST

          [ Parent ]

      •  The worker has to file the SS8 claim (3+ / 0-)
        Recommended by:
        Uberbah, Dirtandiron, CuriousBoston

        The last I heard, several years ago, the rule was that the worker had to file an SS8 claim challenging one's payment as a 1099 rather than as a W-2.  This is difficult because then the employee can;t get a recommendation.  The SS8 procedure has to be changed so that the government can go after these employers rather than the putting the responsibility on the worker.  

        •  Yes, and in many places, the word goes (0+ / 0-)

          out not to hire that person. With the net, employers can circulate a list all over the planet.


          by CuriousBoston on Thu Feb 18, 2010 at 12:20:33 PM PST

          [ Parent ]

      •  You and NYT are both right. (0+ / 0-)

        100 inspectors is probably the most ever brought to the task since the Carter Administration.

        2009: Year of the Donkey. Let's not screw it up.

        by Yamaneko2 on Thu Feb 18, 2010 at 08:14:07 PM PST

        [ Parent ]

    •  Good point (5+ / 0-)

      Yet how much reporting was given to the crackdown on the employment of illegal aliens during the BushCo years?  

      Yet faux outsourcing has been a problem for 10+ years, as well as misclassification of employees as salaried to get more unpaid hours out of them.

      And don't get me started on the displacement of long-term employees by work visa holders.

      •  I was told by a govt. employee (0+ / 0-)

        supposed to be helping me get a job, not to bother to apply for a post that looked like it was written for me. Visa holder. Grrrr.


        by CuriousBoston on Thu Feb 18, 2010 at 12:22:35 PM PST

        [ Parent ]

    •  WTF (1+ / 0-)
      Recommended by:

      The NYT is the mainstream media, and this article will be distributed through their news service to many regional newspapers.

      "Well, I'm sure I'd feel much worse if I weren't under such heavy sedation..."--David St. Hubbins

      by Old Left Good Left on Thu Feb 18, 2010 at 10:18:55 AM PST

      [ Parent ]

  •  The crackdown started last year. (22+ / 0-)

    I believe it was an IRS crackdown.

    Now, if you are sitting at their site working pretty much they have to classify you as a w2 instead of a 1099.

    Doesn't mean you aren't freelance though.

    And doesn't mean you get benefits.

    And doesn't mean they can't say don't come in tomorrow.

    Just means they have to pay their part of Social Security and unemployment.

    •  All that will happen is that the companies (0+ / 0-)

      will figure out some way not to have us sitting at their site.

      "The fact which the politician faces is merely that there is less honor among thieves than was supposed, and not the fact that they are thieves." Thoreau

      by shigeru on Thu Feb 18, 2010 at 05:50:36 PM PST

      [ Parent ]

  •  Oh, heavens (23+ / 0-)

    The executive branch is going to take care that the laws are enforced? Like the frakin' Constitution says they are supposed to do?

    No wonder the Chamber of Commerce is up in arms. This threatens the foundations of American Corporatcracy.

    In theory, there is no difference between theory and practice; but in practice, there always is a difference. - Yogi Berra

    by blue aardvark on Thu Feb 18, 2010 at 07:34:42 AM PST

  •  State Labor Commissions (11+ / 0-)

    do not enforce the law....and in a right to work/fire state?

    You have NO rights.

    •  You don't have many in other states either. (3+ / 0-)
      Recommended by:
      Uberbah, kyril, QuestionAuthority

      Employers are your gods under the law. Once you step into their workplace you loose free speech and many other "rights".

      Pretty much the only reasons they can't fire you is for race, religion or trying to form a union.

    •  Any laid off worker can file unemployment claim (2+ / 0-)
      Recommended by:
      Dirtandiron, CuriousBoston

      If a worker was wrongfully paid as a 1099 when he or she should have been paid as a W-2, that worker can still file for unemployment when laid off.  The difference is that the worker has to challenge the 1099 status and ask the state to investigate.  If the worker files such a claim it has to be investigated.  The rules are very clear and objective.  Was the work performed on the employer's premises? Did the employer determine the manner of work to be done?  Did the employer determine the working hours?  Did the worker have a supervisor?  Did the worker work for only that employer as a 1099.  If the worker had multiple customers all paying him or her as a 1099, the worker could be classified as a 1099.  It doesn't cost anything for a worker to file a claim, and it doesn't require an attorney.

  •  FDIC looking for comments (19+ / 0-)

    Not totally unrelated to this diary, the FDIC is looking for comments through today on their proposal to increase FDIC insurance assessments for Banks who overpay their executives with no incentive for the executives to work for the good of the institution:

    Incorporating Employee Compensation Criteria Into the Risk Assessment System.  12 CFR Part 327 - RIN 3064-AD56

    Leave a comment on the FDIC site, along with Joseph Stiglitz and a few other people!

    Medicare for All, that is the REAL public option that only needs 50 votes + Biden.

    by MD patriot on Thu Feb 18, 2010 at 07:37:11 AM PST

  •  An easy enough fix... (13+ / 0-)

    Make it so there is an

    obligation to pay Social Security, Medicare, or unemployment insurance

    on all employees, whether 'contractors' or not, on the part of the ultimate benefactor of the work, rather than letting temp agencies or the like pay.  And make those payouts be on the total value of the contracted work, not the lesser amount that the employee actually receives in pay after the agency takes their cut.

    I can just hear the screams from the chamber of Commerce now...

    I beseech you, in the bowels of Christ, think it possible you may be mistaken. - Oliver Cromwell

    by Ezekial 23 20 on Thu Feb 18, 2010 at 07:38:00 AM PST

  •  Wish this wasn't sinking - many people will love (12+ / 0-)

    this news. Maybe will catch it. I don't know if the companyt that booted my son still contracts out, but I'm sure they'll be more careful about it.

    Later news, the new company my son works for also outsources. He had to cover for a fellow employee who was took a month off to get married in India - apparently getting hitched is a marathon deal over there.

    Here's just one small payback for cutting back on IT - a major virus has infected companies including 68,000 corporate log-in credentials.

    If you only have a chainsaw, you tend to see every tree as a problem.

    by Sprinkles on Thu Feb 18, 2010 at 07:42:29 AM PST

    •  You and your son need to get active in ANTI-H-1B (5+ / 0-)

      There are a LOT of persons who have been destroyed by this H-1B, L-1, H-2B and other work visas.  

      Join the Programmer's Guild.  Join Bright Future Jobs.

      Write your congressperson and Senators.  MOST IMPORTANTLY, GET OTHERS TO DO THE SAME.

      Bill the Butcher was right. I am a nativist, and that is a progressive position.

      by numberzguy on Thu Feb 18, 2010 at 08:37:28 AM PST

      [ Parent ]

      •  Why are you urging another to action (0+ / 0-)

        when you are not willing to work for your own pony?


        by CuriousBoston on Thu Feb 18, 2010 at 12:29:09 PM PST

        [ Parent ]

        •  What's your point? (0+ / 0-)

          Where are you going with all this?  What exactly are YOU doing?

          Bill the Butcher was right. I am a nativist, and that is a progressive position.

          by numberzguy on Thu Feb 18, 2010 at 01:44:24 PM PST

          [ Parent ]

          •  You are complaining about what has not been (0+ / 0-)

            done, but do not appear to have done anything, even about your favorite pony. The point is if you want something done, you have to help work for it. If a community helps work down the line of things to be done, a lot of ponies can be given. If you don't want to help the community get ponies, or even try to get your own, this is not the place to complain.

            I live in MA, I made a lot of phone calls, and did some door to door.

            I tried to get some kind of answer from my blue dog Rep. Lynch about single payer. I'm now trying to get him to co-sponsor one of Graysons' bills, keeping track of my phone calls, and emails, and replies. That will end up as a LTE.

            I am helping someone get help from Kerry.

            Next week I will be doing local phone calls, and emails everywhere for HCR. I have started writing snail mail, too. Handwritten snail mail.


            by CuriousBoston on Thu Feb 18, 2010 at 03:45:10 PM PST

            [ Parent ]

  •  This is far from new. I remember seeing (5+ / 0-)

    it 25 years ago. Businesspeople have always been crooks. They're just more out front about it now. "Temps" like Manpower are another employee ripoff scam that has long needed attention.

    When an old man dies, a library burns down. --African proverb

    by Wom Bat on Thu Feb 18, 2010 at 07:42:32 AM PST

  •  Contract workers are everywhere. (12+ / 0-)

    My husband was hired by a South Korean company, given an office and a multi-million dollar project to manage.  He even had regular, full time company employees that reported to him and were evaluated by him.  It took 2 years for him to transition to a regular full time employee.  It is they way this company works.  Only Director level and above come in as regular employees.  Of course, we live in Texas, and all power goes to the company.

  •  Hope your son is back on his feet Sprinkles (1+ / 0-)
    Recommended by:

    When we got into office, the thing that surprised me most was to find that things were just as bad as we'd been saying they were. -JFK

    by optimusprime on Thu Feb 18, 2010 at 07:46:45 AM PST

  •  Looks like this diary isn't dropping (3+ / 0-)
    Recommended by:
    Nina, kyril, CuriousBoston

    Great! Thanks, everybody!

    If you only have a chainsaw, you tend to see every tree as a problem.

    by Sprinkles on Thu Feb 18, 2010 at 07:48:38 AM PST

  •  While I agree about classification adjustments... (4+ / 0-)

    because that is just plain trickery.

    Your quoting of the outsourcing of payroll and admin duties is unfair. It is a common business practice to utilize a company that could more effectively do the job you need done for less money.

    If that's your skill, you can work for one of those firms vs the reg company if you are going to be downsized.

    Also, outsourcing coding isn't wrong either, you get what you pay for and not being able to communicate well or explain your needs to your coder thats outsourced is your fault for paying crap to a non-american.

    The problem with outsourcing is when a company moves an entire facility overseas just to pay people less and hide money, not renting a coder.

    Tweetivism -- Tweet all members of the Senate on twitter at once, with one easy form. Push HCR, thats the current topic!

    by no puma on Thu Feb 18, 2010 at 07:49:41 AM PST

    •  And that's usually what happens (7+ / 0-)

      The company vaporizes a division or facility, makes the employees train their replacement, and then shoves them out into the street.

      Republicans and personal responsibility are distant, estranged acquaintances.

      by slippytoad on Thu Feb 18, 2010 at 08:12:20 AM PST

      [ Parent ]

    •  agreed (5+ / 0-)

      Outsourcing is not de facto bad. I think it has become a bad word because it is often conflated with offshoring, e.g.: when American companies use call centers in India, or otherwise contract with low-wage locales. Otherwise, I don’t see what’s wrong with contracting with outside firms to provide services like back office functions.

      Especially with small to medium businesses, they have administrative tasks that take time to deal with but there isn’t enough of the work to merit hiring someone outright. The ~200 employee firm I work for hires an outside company to process payroll. Likewise, we hire an insurance broker to deal with our health plan. There are probably at least half a dozen other tasks we hire out where it would make no sense to keep someone on staff.

      Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

      by Joe Bob on Thu Feb 18, 2010 at 08:39:02 AM PST

      [ Parent ]

      •  Exactly, it would be near impossible (4+ / 0-)

        for a smaller firm to operate like a higher class one without the ability to outsource non-key business activities (not tied to the particular job/service/product being sold).

        Also, finding a person to do payroll / health plan / etc would be too hard since no one is specialized in all and not gonna hire someone for 60k/yr to do job you only need to spend 10/yr on

        Tweetivism -- Tweet all members of the Senate on twitter at once, with one easy form. Push HCR, thats the current topic!

        by no puma on Thu Feb 18, 2010 at 08:46:09 AM PST

        [ Parent ]

        •  works for us (2+ / 0-)
          Recommended by:
          grapes, no puma

          The other thing worth mentioning is that contracting allows people to do the work they are actually trained for. If I’m an architect or a lawyer, I didn’t seek out the profession because I wanted to run payroll and administer benefits. Likewise, the less time I have to spend dealing with administrative overhead is more time I have for actual billable work.

          Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx

          by Joe Bob on Thu Feb 18, 2010 at 08:55:21 AM PST

          [ Parent ]

          •  exactly -- (1+ / 0-)
            Recommended by:
            Joe Bob

            I am in auditing/consulting and we perform much better readiness assessments and reviews of operations vs the client's own IA Departments that always find a reason why a finding isnt one, which then doesnt help the company improve operations.

            Tweetivism -- Tweet all members of the Senate on twitter at once, with one easy form. Push HCR, thats the current topic!

            by no puma on Thu Feb 18, 2010 at 11:49:38 AM PST

            [ Parent ]

  •  Benefits? (2+ / 0-)
    Recommended by:
    smkngman, kyril

    It is rough because so many people need jobs so they are willing to take jobs like these.  Horrible practice.

  •  Here's another scam to avoid benefits (12+ / 0-)

    The company I worked for used to hire "temps" on the payroll. Temps didn't receive benefits. 6 months was the magic number before an employee was considered to be a regular employee entitled to benefits (I think it was a fallout of the Microsoft case).

    So you can guess what happened. Those "temps" were laid off right before the 6 month mark. But the lay off wasn't forever. These were experienced employees in a skilled job. So about a month would go by and the "temp" would be rehired.

    It was acceptable to these workers because at least it was a job in an area with few employers. These were vulnerable people and their circumstances were taken advantage of.

    •  There's a company in our area with a similar (5+ / 0-)

      scam, except that it's not a skilled job, so they never hire the same people back.  They pay extremely well, so people give up their jobs to work for them, each fervently hoping they'll be hired as permanent workers - because they're assured they'll be given "first chance".  Of course, since no full time opportunities Ever open up.  So after six months, these people are laid off, they somehow have it rigged so they can only draw unemployment on their previous employers, where they lower income, (and the previous employers get hit with the payments credited against them, even though they didn't terminate the person), and of course their previous  jobs have been filled by someone else by that time.  So they're without jobs.  It's ruined the finances of many people in this area, but they've been getting by with it for years.  And the union there lets it go on.  Course, they threaten to close the place down and move the jobs overseas if anyone tries to fight it, so. . .

      "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

      by gustynpip on Thu Feb 18, 2010 at 08:37:53 AM PST

      [ Parent ]

    •  Key Phrase (0+ / 0-)

      These were vulnerable people and their circumstances were taken advantage of.

      no remuneration was received by anyone for the writing of this message

      by ItsSimpleSimon on Thu Feb 18, 2010 at 03:47:24 PM PST

      [ Parent ]

    •  Nestle does that here. (0+ / 0-)

      It was touted as being SOOO good for the town, would help some of the people that were put out of work when GM shut down its twenty-two auto plants in the town.

      They hired about a hundred people, and have them work two months, three weeks, then lay them off for a month.

  •  So let me get this straight (1+ / 0-)
    Recommended by:

    Companies are classifying workers as independent contractors as a means of avoided paying taxes??  The hell you say!!  By cracking down on this practice all they are going to do is encourage more outsourcing, not less.

  •  Tipped and recommended (4+ / 0-)
    Recommended by:
    Aexia, smkngman, kyril, CuriousBoston

    Because employers should not use loopholes like this to avoid paying into Social Security and unemployment insurance.

    We continue to crack down unmercifully on these abuses, and a lot of the so-called "Social Security crisis" goes away. It's just law enforcement. You got a problem with law enforcement, Mr. Chamber of Commerce?

    "Lash those traitors and conservatives with the pen of gall and wormwood. Let them feel -- no temporising!" - Andrew Jackson to Francis Preston Blair, 1835

    by Ivan on Thu Feb 18, 2010 at 08:17:51 AM PST

    •  Actually, this probably won't have a great (2+ / 0-)
      Recommended by:
      wsexson, jabuhrer

      effect on SS, because the person who's classified as an independent contractor is supposed to then pay self employment taxes - the share of both employer and employee.  It's primarily the workers who will be helped.

      "If you trust you are not critical; if you are critical you do not trust" by our own Dauphin

      by gustynpip on Thu Feb 18, 2010 at 08:39:41 AM PST

      [ Parent ]

  •  feds do it too (2+ / 0-)
    Recommended by:
    Boisepoet, kyril

    Actually, federal agencies do the same kind of thing, keeping people on the payroll for just under the limit that would entitle the employee to benefits. Fair employment practices should start at home.

  •  I Love It When the Revenuers Get Involved (2+ / 0-)
    Recommended by:
    sawgrass727, CuriousBoston

    Historically, some of the biggest criminals go down for tax cheats.

    Prosecute employers who are tax evaders as tax evaders.  Get them on the labor laws after first getting tax evasion convictions.  Collect the fine.  Do the time.  Now, that's justice.

    "ingratiation and access . . . are not corruption." -- Justice Kennedy (Citizens United v. Federal Election Commission, 2010)

    by Limelite on Thu Feb 18, 2010 at 08:31:27 AM PST

    •  It's tough (2+ / 0-)
      Recommended by:
      Limelite, cwsmoke

      because most people are in a vulnerable position where they feel like they can't risk their jobs by pushing the issue. Employers know this and take advantage of it.

      However, if you can afford to risk losing your job and really want to stick it to these guys, I recommend doing what my girlfriend did: file your taxes at the end of the year as a full time company employee, not as an Independent Contractor. When the IRS contacts you and says the company is saying you are not an employee, just reply and say "Huh, weird. According to the IRS materials that I found, I should be defined as an employee."

      They'll take it from there ;)

      Immanentizing the eschaton is a *good* thing.

      by jabuhrer on Thu Feb 18, 2010 at 09:14:25 AM PST

      [ Parent ]

  •  At Pacificare, this is standard practice (4+ / 0-)

    Pacificare is one of the largest health insurance companies around.

    The irony, of course, was that few of their employees, at least in the department I worked in, actually get any benefits.

    There were over 100 people in the department I worked in, and I recall about four or five were full-time employees with benefits.

    All the rest were, uh, permanent contractors.

  •  Illegal immigration = H-1B, L-1, J-1 visas (5+ / 0-)

    These visas are used to bring in illegal aliens to undercut the labor market and provide a source of YOUNG CHEAP and DOCILE labor.

    1. In Florida, the J-1 mechanism is used by Publix supermarkets to bring in Brazilian and Peruvian workers to bag groceries.  Why?  UNION BUSTING
    1. 1 in 3 workers in IT in this country are now foreign, mostly Indians.  They are illegal aliens, in that they bypass the normal immigration mechanism.

    These visas must be eliminated.

    Bill the Butcher was right. I am a nativist, and that is a progressive position.

    by numberzguy on Thu Feb 18, 2010 at 08:35:13 AM PST

    •  cut back? yeah (3+ / 0-)
      Recommended by:
      Brooke In Seattle, kck, CuriousBoston

      especially with 18% real unemployment numbers.

      Not sure they need to be outright eliminated though.  More importantly, I don't think it's enough to sit here and talk about reform that will never happen.  It depresses me more and more with the job market going down the toilet in the midst of this "recovery"

      Manufacturing jobs are needed, but we still aren't talking about a national industrial policy.  As others have pointed out today we've lost over 5 million manufacturing jobs to offshoring in the past decade.  We've also added millions of cheap labor from undocumented workers from the south.  

      Our country is being destroyed from the inside out.  

      Sunshine on my shoulder...

      by pkbarbiedoll on Thu Feb 18, 2010 at 08:42:08 AM PST

      [ Parent ]

    •  For the H-1b (2+ / 0-)
      Recommended by:
      MrPlow, The YENTA Of The Opera

      ...your comment is an not a useful generalization, assuming there are always abuses.

      The workers on these visas are by definition not illegal aliens.

      These visas don't need to be eliminated to deal with the hornet's nest of labor abuses involved with importing foreign workers.  

      Do you have a link on the grocery bagging mention? That sounds incredible and, if true, fixing should be low hanging fruit.

      HR 676 - Health care reform we can believe in - national single-payer NOW.

      by kck on Thu Feb 18, 2010 at 08:48:02 AM PST

      [ Parent ]

      •  Which Publix? (2+ / 0-)
        Recommended by:
        boofdah, The YENTA Of The Opera

        I live in Florida and have been in many Publix stores and while I don't agree with some of their practices, I have never seen anyone but older retirees and young high school students bagging my groceries. I imagine this is probably isolated to a few stores..maybe places that are more affluent? It certainly not happening in my part of the country. Of course, Publix isn't exactly a paragon of goodness...but this practice doesn't seem to be widespread.

      •  There are plenty articles - google "publix j-1" (1+ / 0-)
        Recommended by:

        Bill the Butcher was right. I am a nativist, and that is a progressive position.

        by numberzguy on Thu Feb 18, 2010 at 08:57:51 AM PST

        [ Parent ]

        •  Rep. Paige Kreegel, R-Punta Gorda (0+ / 0-)

          The Republican Rep needs letters and calls as well as the local DA and federal attnys office.

          Thanks for the link. There's your story.

          Publix Super Markets, Inc. (commonly known as Publix) is an American supermarket chain based in Lakeland, Florida.

          Founded in 1930 by George W. Jenkins, it is an employee-owned, privately held corporation and was ranked No. 10 on Forbes' 2008 list of America's Largest Private Companies and is the largest in Florida.[3] The company's first half of 2009 sales totaled US$12.4 billion, with profits of over $622.3 million,[2] ranking #101 on Fortune magazine's Fortune 500 list of U.S. companies for 2009. Supermarket News ranked Publix No. 7 in the 2009 "Top 75 North American Food Retailers" based on 2008 fiscal year sales.[4] Based on 2006 revenue, Publix is the fifteenth-largest retailer in the United States.

          Also, you might wnt to update the Controversy section in their wiki.

          HR 676 - Health care reform we can believe in - national single-payer NOW.

          by kck on Thu Feb 18, 2010 at 09:16:52 AM PST

          [ Parent ]

    •  Most of these not illegal (4+ / 0-)

      H-1B, L-1, "guest worker" programs, etc., do not represent illegal hiring, though it should, because it creates a labor pool treated differently than everyone else, and it's an excellent way for corporations to get around labor laws, bust unions, prevent organization and undercut any establishment of a prevailing wage.

      I agree the practice needs to stop, as well as the more overt illegal hiring practices of entirely undocumented workers, for the same reasons.

      If you can find money to kill people, you can find money to help people. --Tony Benn

      by rhetoricus on Thu Feb 18, 2010 at 08:53:50 AM PST

      [ Parent ]

      •  I said "illegal immigration" not "illegal hiring" (2+ / 1-)
        Recommended by:
        rhetoricus, CuriousBoston
        Hidden by:

        And, yes, the H-1B is a method for illegal immigration, since it bypasses the immigration system.

        Bill the Butcher was right. I am a nativist, and that is a progressive position.

        by numberzguy on Thu Feb 18, 2010 at 08:55:48 AM PST

        [ Parent ]

        •  H1-B is PART of immigration system (4+ / 0-)

          H1-B is a valid, legal, and theoretically temporary immigration status. Conflating it with illegal immigration is very disingenuous.

          H1-B [b]abuses[/b] result from bad policy formulation and arguably weak enforcement - but the existence of abuses doesn't make the H1-B holders into criminals.

          It means that policy makers are incompetent and negligent.

          -2.38 -4.87: Damn, I love the smell of competence in the morning!

          by grapes on Thu Feb 18, 2010 at 11:06:23 AM PST

          [ Parent ]

          •  It's not disingenuous (1+ / 0-)
            Recommended by:

            it's worse than that. It's scapegoating, and we all know where that goes.

          •  The policy is an abuse (1+ / 0-)
            Recommended by:
            Alexandra Lynch

            Not because it invites immigrants to live and work in the country, but because it creates a sneaky way for corporations to get around general labor laws, workman's comp, social security, insurance, prevailing wage, etc.

            It's a practice that absolutely destroys the labor gains that people suffered and died for last century.

            I have no problem letting people from other countries work here. But creating an exploitative labor class just for them ultimately hurts everybody except the greedy corporations trying to pad their bottom line.

            If you can find money to kill people, you can find money to help people. --Tony Benn

            by rhetoricus on Thu Feb 18, 2010 at 12:59:14 PM PST

            [ Parent ]

        •  H1 B visa holders are legally in this country (3+ / 0-)
          Recommended by:
          Aexia, FG, missississy

          stop the demonizing.  You can criticize the system without lying about the people who use it because it is offered LEGALLY to them as a way to come to this country.

        •  Please be aware of who is behind it, though (1+ / 0-)
          Recommended by:
          Alexandra Lynch

          This is not the immigrants' fault--they're just trying to work and eat. It's the fault of the corporations that want to create a way around general labor laws, paying unemployment, social security, and prevailing wage. It's about corporate greed.

          If you can find money to kill people, you can find money to help people. --Tony Benn

          by rhetoricus on Thu Feb 18, 2010 at 12:55:32 PM PST

          [ Parent ]

    •  The visas probably should be eliminated (3+ / 0-)
      Recommended by:
      Aexia, grapes, CuriousBoston

      but they are NOT illegal immigrants.   You're misusing the term, in order to inflame people.

      •  If you eliminate H1-B you need a substitute (1+ / 0-)
        Recommended by:

        H1-Bs fulfill a critical bridging function in the immigration system. Remove them and we would never be able to bring in new faculty unless they were American nationals.

        We would then train faculty in our PhD programs but be forced to send them all (especially the best ones) back to their home countries to build their universities to compete with ours.

        That will really help us compete in the global economy.

        With a shaky education system and a high tech world, we WANT to have a brain drain flowing in our direction.

        What we don't need is to have a totally necessary mechanism hijacked and debased by using it to run onshore sweatshops.

        -2.38 -4.87: Damn, I love the smell of competence in the morning!

        by grapes on Thu Feb 18, 2010 at 11:11:37 AM PST

        [ Parent ]

        •  are you a faculty member? (1+ / 0-)
          Recommended by:

          Are the American students who graduate from your program qualified to enter as graduate students in your program?  

          I think that there is a tremendous double standard in that STEM programs in this country are not adequately preparing American students.

          I also am quite sure that TOEFL is not a test of comprehensibility.  Many foreign TAs are unintelligible in English.

          Bill the Butcher was right. I am a nativist, and that is a progressive position.

          by numberzguy on Thu Feb 18, 2010 at 11:35:41 AM PST

          [ Parent ]

        •  If we need them (1+ / 0-)
          Recommended by:

          give them a green card. Then they can't be exploited by being trapped under one employer.

          Can you imagine if the word goes out that the USA offers simple and full immigration paths to people like those you describe?  Universities would have their pick of those from many parts of the world. Europeans can't compete with that.

    •  But they are LEGAL (1+ / 0-)
      Recommended by:

      You seem to have the definition of 'illegal' all wrong. If somebody works here on a H1b VISA issued by the US State department then that person is a proper legal worker.

      Now there are some illegalabuses, especially of the L1 VISA. But the ones breaking the law are the employers. The workers themselves never did anything illegal.

  •  I was such an employee (2+ / 0-)
    Recommended by:
    Alexandra Lynch, CuriousBoston

    labeled as a contractor, but with all of the same work conditions as "regular" employees, just without benefits.

    Our company, a very large conglomerate, still does this.

    Very good for a start for the stop of this practice.

    Fox News in a Nutshell: IOKIYAR and INOKIYO (It's Not OK If You're Obama)

    by wry twinger on Thu Feb 18, 2010 at 08:36:37 AM PST

  •  Please make the distinctions (2+ / 0-)
    Recommended by:
    snkscore, ItsSimpleSimon

    There are multiple issues in your diary that are not clearly discerned

    Incorrectly calling full time employees contractors.
    Taxes are different. Contractors get no benefits and are usually terminated when the job is done. For professionals, contracting salaries usually higher. Often the young IT workers prefer the contractor's salary and travel and have to be convinced of the benefits of full time employment. Whether it is a short term cost or benefit to either the employer or the worker shifts like a pendulum with the economy. Now, with high unemployment and new energy start-up the employees would want to avoid contacting. The IRS cares for tax revenues only.

    Companies focusing their management (and budget, theoretically) on their core product or service and using other companies for back-office type operations: payroll, printing, housekeeping, etc. Nothing regressive on the economy as the outsourcers are simply other, perhaps smaller, businesses. Probably same overall number of workers distributed over more employers with more management jobs overall.

    Older companies with good legacy benefit packages or uions can outsource to new startup companies and break the cost chain of the benefits. The start-ups, created in this economy, are unlikely to have as rich benefits and may even lack them entirely. Also, the outsourcer, since it is client-based, may have more liberty to game the contractor vs. employee equation.


    Sending US jobs to other countries.

    HR 676 - Health care reform we can believe in - national single-payer NOW.

    by kck on Thu Feb 18, 2010 at 08:41:13 AM PST

    •  He was told that he would be considered as (2+ / 0-)
      Recommended by:
      Brooke In Seattle, jabuhrer

      a full time employee, which, apparently they had no intention of fulfilling. There were no promises of travel, a better package, etc. The carrot on the stick were benefits in 9 months. Rumor has it (he's kept in contact with some of the ex-IT's) that the place is going downhill - IT support is a crucial component of any company.  

      They must have realized into his employ that it would be much cheaper to pay non-employees (like contract workers) for the same work. But I still wonder about that lack of paperwork in the beginning.

      Would you believe he got injured at a paint- ball party? Those things can hurt!

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Thu Feb 18, 2010 at 08:54:41 AM PST

      [ Parent ]

      •  Jobs, like marriages, should never be entered... (0+ / 0-)

        ...based on future changes.

        Even the promise on paper, which is of course necessary for a business promise, circumstances change and although you may be compensated legally you still may suffer.

        Take a job because you're willing to do the work for the compensation (e.g., wage, training, experience, location) you will receive. When the equation changes against your favor make a change. Loyalty or promises are not in the equation. For many companies today, equity is no longer in the equation.

        I would at least want to have known the number of workers who were hired as contractors and the number converted if conversion was a show stopper. If the co is going downhill then they'd certainly not convert him to full-time. That writing should have been on the wall when he applied so he learned a valuable lesson.

        Also, they may not have liked him.  

        Not a lawyer but I see nothing illegal here, it's a harsh market these days.  

        HR 676 - Health care reform we can believe in - national single-payer NOW.

        by kck on Thu Feb 18, 2010 at 09:05:50 AM PST

        [ Parent ]

        •  That's lot of comfort for (1+ / 0-)
          Recommended by:

          the boatloads of inexperienced new grads in their early 20's with tens of thousands of dollars in student loans that are just happy to find ANY work in this economy. A lot of today's young workers are learning the lesson that you are describing the hard way, and their first experience on the job market is getting fleeced by greedy companies that are using the same rationale that you are here.

          Nice to see such compassion.

          Immanentizing the eschaton is a *good* thing.

          by jabuhrer on Thu Feb 18, 2010 at 09:52:06 AM PST

          [ Parent ]

          •  If compassion is desired... (1+ / 0-)
            Recommended by:

            ...then a job seeker really needs to have low expectations and be very selective about the position and company they choose. (Some) People are compassionate but the marketplace is not at all.  

            I feel so sorry for job seekers today but they individually should feel optimistic. Mostly because no one wants to hire a depressed, pessimistic, or negative person but also because there are jobs.  And they'll be entering a market without out dated expectations like older workers have so they should be more adaptable. They will finds ways to make it work for them. The country at least needs to protect Americans from importing workers. The labor market will still have ups and downs but new strategies for benefits obviously need to be designed.

            HR 676 - Health care reform we can believe in - national single-payer NOW.

            by kck on Thu Feb 18, 2010 at 10:29:07 AM PST

            [ Parent ]

  •  Microsoft was caught in the '90s (3+ / 0-)
    Recommended by:
    Aexia, sawgrass727, CuriousBoston

    The Microsoft case resulted in changes in employment practices because other employers were afraid of also being caught and paying out big bucks ($97 million). Microsoft eventually appealed to the Supreme Court.

    Here's some background on the Microsoft case:

    Microsoft had the workers sign agreements stating that they were independent contractors, or "ICs" (nonemployees), and were not entitled to participate in Microsoft's employee benefit plans. Microsoft did not withhold or pay any Social Security or other payroll taxes for them.

    Microsoft's problem was that it failed to treat them like ICs -- that is, like people running their own independent businesses. Instead, Microsoft integrated the workers into its workforce: They often worked on teams along with regular employees, sharing the same supervisors, performing identical functions and working the same core hours. Because Microsoft required that they work on site, they received admittance card keys, office equipment and supplies from the company.

    Microsoft's treatment of the workers clearly spelled out "employee," not independent contractor. A worker qualifies as an IC under the test the IRS and many other government agencies use only if the worker -- not the hiring firm -- has the right to control the manner and means by which he or she does the job. Government auditors examine a number of different factors to determine whether the hiring firm or the worker has this right of control, such as whether the workers must follow company directions, are furnished with tools and materials, are integrated into the company's regular business and so on.

    Under IRS regs it was determined that Microsoft was liable to pay FICA, FUTA, and withholding. Microsoft paid back taxes. However, 8 employees believed they were entitled to full employee benefits including 401k and stock purchase. They filed a lawsuit.

    The case had gone on since the early '90s and the Supreme Courtrefused to hear the case in 2002.

    Under a settlement agreement upheld by the Ninth Circuit Court of Appeals in May 2002, Microsoft agreed to pay approximately $97 million, which includes compensation to class members, attorneys' fees, and expenses of litigation. This settlement was the largest ever for a "permatemp" class action.

    Maybe the practice is becoming more prevalent as employers don't want to hire regular employees. It is very easy for contractor employees to become indistinguishable from regular employees.

    •  Microsoft still hires people for one year (4+ / 0-)

      through temp/contracting agencies, then lets them go on Day 366.

      They have to be unemployed for a set period of time, then they can "hire" them again, for 365 days.

      It's a freaking racket, and nobody stops it.

      The temp/contracting agencies are another massive racket. They are the ones that advertise jobs, interview candidates and conduct background checks, and then put your file in a cabinet and ignore it.

      They only advertise the jobs and go through the motions so that Microsoft can hire more of the H1-B's Bill Gates is always whining about needing.

      There are plenty of workers available in this country to work, but unscrupulous employers don't want to pay them decent salaries or offer benefits.

      "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

      by Brooke In Seattle on Thu Feb 18, 2010 at 09:17:14 AM PST

      [ Parent ]

  •  Yup. Any college instr who isn't tenure-tracked (0+ / 0-)

    If you can find money to kill people, you can find money to help people. --Tony Benn

    by rhetoricus on Thu Feb 18, 2010 at 08:50:20 AM PST

    •  Like the woman at the meeting (1+ / 0-)
      Recommended by:

      told she would not get tenure, and shot people dead and injured. A comment above stated a a small plane that was crashed intentionally had a suicide note related to money, perhaps IRS and job.


      by CuriousBoston on Thu Feb 18, 2010 at 12:46:18 PM PST

      [ Parent ]

  •  Thank you Obama, this helps give me hope. (4+ / 0-)

    I'm starting down my road in IT, and it'd be nice if I could stay in the states instead of having to look abroad just so I don't get stiffed on an actual full time job.  

    I'm so glad we have a president that wants to help out the technological sector.  It's a field where you can never do enough for it.

    "I am sick and tired of this Republican garbage!"- Joe Biden

    by Trakd on Thu Feb 18, 2010 at 08:50:26 AM PST

  •  I'm definitely one of those guys (6+ / 0-)

    Got a desk, a phone, an email address, a computer and show up every day.

    But then I'm also not really going to push it because I've only been back in the country 3 months and I'm lucky to have ANY job.

    I moved to england for a couple of years to take care of my mum (and let me tell you, qworking there was incredible - i worked part time for a film school and 3 months after i got hired I was told I had almost a month's worth of vacation and sick time!) then came back in the middle of the worst recession I've ever lived through.

    It's something I deal with as a videographer/editor, but I wasn't aware it was happening to so many other people. It's par for the course for my field, though

  •  A great source for employee rights (6+ / 0-)

    These issues are important - thanks for highlighting how the Administration is pushing back on companies that abuse fair labor practices.

  •  This has cost me thousands of dollars (8+ / 0-)

    not to mention ripping off social security, medicare/medicaid, etc.

    I'm in my mid 20's and work in the video game industry, so myself and just about everyone I know has been through this to some level or another. It is a shame. I've got a lot of horror stories, but the one that affected me the most was my partner. She was hired by National Cinemedia (happy to attach their name to this) as what can only be described as a full time, in-house production artist. She had a workstation, a cubicle, and was expected to be at work at 8am every morning til at least 5pm every day (of course, she was often required to work much later). She was not allowed to work from home.

    However, despite these terms (which obviously indicate a traditional, full time company employee) she was told when she was hired that it is company policy to at first take people on "for a couple of months" on a trial period - as Independent Contractors. Being a new grad with student loans and other bills to pay, she decided to take them at their word and assume that she'd have her status changed to full time employee with benefits after she had satisfactorily shown that she is a competent worker. It was a bit of a risk, as she is a Type 1 Diabetic that absolutely relies on having health care to survive.

    So she started work, and worked her ass off (typically putting in lots of unpaid overtime, as is the norm these days with this type of job). I helped her pay the $500 a month that COBRA cost her so that she could get her diabetes supplies and, ya know, stay alive. 3 months went by ($1,500 in COBRA payments for us, god knows what tax savings for National Cinemedia). She asked her art director about the prospects of updating her position so that she could get benefits, making her case that she has been working extra hard and her work has been used with exceptional prominence considering that she was such a new employee. The answer that she got was, of course, "I would love nothing more than to upgrade your employment status, but we're going trough a tough time as a company with the economy and all and we just don't have the funding right now. We'll put you on full time status as soon as we possibly can."

    That same conversation happened several times over the course of a year and a half. As some of you know, you can't stay on COBRA forever. After spending many thousands of dollars on her health care and medical supplies, we were faced with the prospect of COBRA running out. The next best thing would be private insurance, which for a Type 1 Diabetic can mean much more. We were looking at Cover Colorado, which would probably have been around $800/month. Out of the question. The economy was bad for US too. Not a lot of hiring going on. She ended up going to her boss and saying "Sorry, I can't wait any more. I can't afford the medical supplies that I need to stay alive. I would be better off going to work for Starbucks, where they even give health insurance to part time employees. So that's what I'm gonna do."

    Of course, upon hearing this, the boss told her that...big surprise...they just decided that they were ready to hire her full time. She told them where to shove it, and has been much happier since she left that place. At the end of the year she filed her taxes as a full time employee (which she technically was using the IRS's own definition), and I believe that got the company in some trouble.

    Immanentizing the eschaton is a *good* thing.

    by jabuhrer on Thu Feb 18, 2010 at 09:03:08 AM PST

  •  Alternative View (1+ / 0-)
    Recommended by:

    I've been working as an independent contractor for a major firm for the last 12 years and it's a perfect setup for me.

    I do feel very much a part of the team and have strong identification with them, but I'm paid more for my time than I would be if I were an employee.

    I don't have benefits from them, obviously, but in my case my spouse has benefits, so I'm better off simply getting the higher pay.

    By having my own business I have a lot of deductions that I would not be able to take if I were an employee.

    True, there is no job security, however the unique value I deliver to my client every day is my security.

    On the other hand, should budget cuts cause me to lose this gig, I feel confident of finding new clientele.  The fact that a company can buy me 'by the hour' rather than making a full-time employee commitment makes it easier to get my foot in the door.

    I've been offered full-time employment more than once by my current client but I'm much better off as a contractor.  

    Not saying this is right for everybody, but just wanted people to see that there is another side of the coin.

    Some people fight fire with fire. Professionals use water.

    by Happy Days on Thu Feb 18, 2010 at 09:09:47 AM PST

    •  I've known people where I work like that (1+ / 0-)
      Recommended by:
      Happy Days

      and there was some resentment because the contract employees were payed higher than the full-time regular employees. The fairness issue can go both ways. There really isn't any job security for the regular employees either.

    •  But you have "unique value." (4+ / 0-)

      Sadly, most of us don't.

      We don't like to admit it, but we really AREN'T anything special, no matter how good we are at our jobs. There are hundreds out there who can do the job as well -- or well enough for the lax quality that is accepted these days in most organizations.

      So, we are replaceable and replaced.

      But even if one has a "unique value," if the way to pay for that good or service dries up -- that is, your demand goes away -- what good does that "unique value" do you? You can't eat it or pay your bills with it. Maybe you can barter services with it, but that's doubtful because, as you say, it's unique.

      Kind of like education of the masses won't guarantee them jobs if the jobs just aren't available in the first place.

      "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

      by Brooke In Seattle on Thu Feb 18, 2010 at 09:25:03 AM PST

      [ Parent ]

    •  This is different. (3+ / 0-)

      You're talking about a legitimate contractor scenario. Obviously this exists, otherwise Independent Contractor status would not exist.

      What a lot of people here are talking about is abuse of the Independent Contractor practice, which has been widespread in the past few years. There are a lot of companies that are simply taking advantage of young, inexperienced people and using this as a loop hole and a tax dodge. I'm in my mid 20's and have worked in the video game industry for the past 6 years or so, and I can tell you that Independent Contractor fraud is real, and I've been the victim of it myself. Just because legitimate independent contractor situations exist does not mean that fraud does not.

      Immanentizing the eschaton is a *good* thing.

      by jabuhrer on Thu Feb 18, 2010 at 09:30:56 AM PST

      [ Parent ]

    •  This model does work for some people... (2+ / 0-)
      Recommended by:
      Happy Days, melpomene1

      ... but the access to health care and other benefits is usually the big factor.

      Providing an affordable alternative to the employer-paid health insurance benefit would be a tremendous boon to people who can't (or would prefer the option not to) get those permanent jobs.

      Some people -- and some lines of work -- do very well in the contractor/temporary work model. But a lot of them can only do it because they have a spouse with full benefits -- or are getting by hoping they won't NEED health insurance until they can actually get a job that offers it.

    •  Except for Gnarly Self-Employment Taxes, (1+ / 0-)
      Recommended by:
      Happy Days

      I would say the same thing for myself.  I was self-employed for a few years, contracting to multiple companies.  But taking 33% clean off the top of my pay for all the deductions was too much for me.

      That is why I also believe the tax code is unfairly biased against small businesses - the self-employed get stuck paying these huge taxes until people are 'big' enough to incorporate, etc.

      "None are more enslaved than those who falsely believe they are free." - Goethe

      by Sarea on Thu Feb 18, 2010 at 04:09:48 PM PST

      [ Parent ]

  •  this is a VERY common practice (2+ / 0-)
    Recommended by:
    jabuhrer, CuriousBoston

    especially giving support staff fancy titles in order to claim they are "exempt" -- which just means they want secretaries to put in extra hours with no overtime.

    "Politics is like driving. To go backward put it in R. To go forward put it in D."
    --Tom Harkin

    by TrueBlueMajority on Thu Feb 18, 2010 at 09:12:33 AM PST

  •  Where I work there are some (1+ / 0-)
    Recommended by:
    Catte Nappe

    contractor employees that have preferred to remain in that position. Some of them worked nearly full time for the company for many years, but the amount of compensation they get is sometimes higher than the regular employees, even accounting for the fact that the regular employees are given benefits. I think the contracted employees are able to get health insurance through their contracting agency, but I'm not sure about that. I think the company started to change their approach to this though, whether because of legal or economic reasons, and some of the people who were contract employees for many years became regular full-time employees.

    •  Good contractors work for good contracting firms (1+ / 0-)
      Recommended by:
      JanetT in MD

      And get benefits and paid "time on the beach" between jobs.  

      In IT the worst managers have the longest term contractors where they allowed critical work to be done by the contractor wh then possesses critical knowledge and may be unwilling/unable/unavailable to transfer it to a permanent employee.  

      HR 676 - Health care reform we can believe in - national single-payer NOW.

      by kck on Thu Feb 18, 2010 at 09:24:40 AM PST

      [ Parent ]

    •  "contracting agency" (1+ / 0-)
      Recommended by:

      This seems to imply that it is more of a traditional contractor situation going on, which is a bit different that what is happening a lot today with young people at tech companies.

      A lot of these companies are really taking advantage of young new grads, basically saying "Wow, we love your work, how would you like to work for us? Just sign here!" and then handing over independent contractor tax paperwork. Many times they intentionally try to obscure the fact that you're actually being hired as an independent contractor rather than a regular employee. A couple of years ago when I graduate, I even sat through a few interviews where the person tried to close the interview and get me to sign paper work before I could even ask about it. I asked "Um, let's back up a second. I'm not ready to sign anything just yet. Can we discuss benefits?" To which the interview answered "Um, yeah, uh, well see, for this position we normally sign people on for a trial period mumble mumble mumble..."

      Sound crazy? Sound like something no one in their right mind would put up with? Well, it is crazy, but these people know what they're doing: they're taking advantage of young, inexperienced kids that are just happy to find work in a tough economy. I know that a lot of contract positions are legit (or else the title wouldn't even exist) but trust me, I work in the video game industry and actual manipulation like this happens every day.

      Immanentizing the eschaton is a *good* thing.

      by jabuhrer on Thu Feb 18, 2010 at 09:25:10 AM PST

      [ Parent ]

      •  I wonder if anyone explains (0+ / 0-)

        to those young workers the details of saving to pay the self-employment taxes and quarterly estimated taxes.  There's a host of mistakes waiting for them.

        Sometimes it's better to individually address a problem rather than just criticize our politicians for failing to do so.

        by texasmom on Thu Feb 18, 2010 at 06:58:37 PM PST

        [ Parent ]

  •  Chamber of Commerce (2+ / 0-)
    Recommended by:
    jabuhrer, Kokomo for Obama

    "Cheating is good, because it can make you more money."


  •  A number of years ago my sister was (2+ / 0-)
    Recommended by:
    texasmom, Catte Nappe

    "reclassified" by her employer as an independent contractor after years as a full time employee, with a resultant hit on her pension rights.  They've since parted ways and it's been hell getting her the pension to which she was entitled as opposed to the cooked up crock of crap they're trying to foist on her as her pension interest.

    Thanks for posting this.  I called her and it was the first good news she's had.  It's not a big corporation, just a little family owned company, but her previous complaints to the IRS have gone virtually unheeded with the exception that they did send a letter to the employer telling him he was wrong.  No sanction, no threat of sanction, no followup.  

  •  Hopefully they'll go after Fedex next: (6+ / 0-)

    Fedex has a habit of calling its drivers "independent contractors".

    There's more on

  •  Where/who would I rat to .. (4+ / 0-)

    ... on a company I used to work for does a lot of the 'full time' self contracting schtich with a govvie agency. They 'hire' self contractors, peddle them as full time employees and then delay delay payments, blackmail about job security, and a dozen other not nice things.

    This company deserves a deep peek into their finances and hiring practices, especially since they have a number of contracts that deal with DoD security and IT and are classified as small business minority owned [1 minority person with 2 Ferraris].

    Two friends of mine got had by this company; one went to court against them and won, sorta. The other friend is still getting screwed with promises. I was lucky; I got out in time.

    I know there is a lot of this that goes on in govvie contracting but this company is one of the worst and deserves some payback. Anyone know where a complaint can be made?



  •  Good information (0+ / 0-)

    But your "bootstrapping" article pertains to non-profit organizations. And many of those really don't need (nor can afford) a full time IT person, a full time HR or payroll person, etc.

  •  The old scam in outsourcing (5+ / 0-)

    ...was to treat low-paid employees as exempt employees, denying them overtime (or even additional compensation) for overtime hours worked.  This was epidemic in the IT and tech writing outsourcing business in the 1980s.  Folks who took the trouble to hire a lawyer often got compensated but were often quickly terminated for bogus causes and then blacklisted.

    In the Bush administration, all this became legal and was ratified by a bill in Congress.  It's time to roll this back.

    The other common scam is to have timeclocks and force staff to work offclock when they are catching up on their paperwork at home (no way to punch the clock there) or through orders to work off clock or be terminated.  This is still illegal and Hilda Solis has been increasing the number of investigators in DOL's Wage and Hour Division to deal with this.

    50 states, 210 media market, 435 Congressional Districts, 3080 counties, 192,480 precincts

    by TarheelDem on Thu Feb 18, 2010 at 09:50:38 AM PST

  •  The goverment does this too... (3+ / 0-)

    ...almost ALL IT work in the federal government is now done by contractors, and many of them are working contract-to-contract.  They may or may not have benefits, depending on the contract and the company.

    My roommate has one of those jobs. She does have benefits, but no job security -- at any time, the company she works for could lose the contract, and she would then lose her job (with no guarantee they could find another contract to place her on). It's really hard to feel secure in your future if you don't know you'll have a job three months from now.

    This may save the government money (as the contracts are put up for competitive bids) -- but it doesn't make for the best quality IT work. (And given how much the government pays defense contractors, compared to when they used to have those development jobs done in-house by federal employees, I'm not sure it saves money either).

    But with technical jobs like IT, having contractors means there's no continuity, and you often have a new company coming in to maintain or refurbish software and computer systems they did not build (and at least based on anecdotal evidence, never works the way you expect it should). You end up with a patched-together systems, built by inexperienced (but low-cost!) people, with insufficient training in its use, and no stake in long-term maintenance of whatever system they're building or supporting.

    But even the contracting out/short-term employment business model would be less chaotic and stressful for workers if we had a health care system that was independent of employment... as they do in most of the REST of the western world.

    And if businesses didn't have to worry about health care costs, they might be able to hire more workers on a real full-time basis -- or if they could at least reliably PREDICT those health care costs more than a few months in advance, so they would know exactly what adding three more workers would mean in their budget two years from now.

    •  So true... (3+ / 0-)

      I work on one of those right now. I was hired as a full time benefitted employee, for about 20% less money than I made as a contractor. Only I found out that what I was really hired for was a 6 month federal government contract. They didn't bother to tell me that until AFTER I moved my entire family across the country to take the job.

      After 6 months the contract ended and I sat unpaid for months until the company was able to pick up a new contract.

      "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

      by Phil In Denver on Thu Feb 18, 2010 at 10:40:57 AM PST

      [ Parent ]

  •  Investigation needs to be expanded. (3+ / 0-)

    Into long term "temps" working through national contracting agencies.

    I was a "temp" contractor for almost 9 years, even though I had my own desk, phone and computers. Until they finally off-shored my software dev job that is.

    -8.00, -8.26 "Fascism is capitalism plus murder." - Upton Sinclair

    by djMikulec on Thu Feb 18, 2010 at 09:59:28 AM PST

  •  I was almost sucked into one myself (1+ / 0-)
    Recommended by:

    if it weren't for my mom pulling me out. Vector Marketing is marketing firm that uses college students and recent high school graduates to sell their kitchenware. The bad thing is...they take money from their employers, make the employers drive their own cars with out gas compensation and regularly misrepresent their pay cycle. Places like these need to be shut down or changed is amazing places like these are still running.

    Pain is inevitable, suffering is optional.

    by JamesE on Thu Feb 18, 2010 at 10:03:24 AM PST

  •  Fed Ex has been attempting (8+ / 0-)

    to classify their drivers as independent contractors, even though the company owns and operates the trucks, and their workers are employees in every traditional sense. Scumbags. Their CEO is an anti-union fuckstain, too.

    I ship with USPS (mostly) or UPS.

    "A lie is not the other side of a story; it's just a lie."

    by happy camper on Thu Feb 18, 2010 at 10:06:48 AM PST


    Sorry, I'm still a mom. Heard from my son (I called him to give him a head about his new found fame) and he says that he and 'all the others' had been classified as interns, but only the top three were hired full time. Two others were contractors. His last comment?

    No, what  did... and they'll be hurt by this law for sure

    Massachusetts has a compliance advisory written in 2008 on the books - maybe this new task force will give it some juice.

    Some stipulations -






    Chapter 149: Section 148B. Persons performing service not authorized under this chapter deemed employees; exception

    Section 148B. (a) For the purpose of this chapter and chapter 151, an individual performing any service, except as authorized under this chapter, shall be considered to be an employee under those chapters unless:—

    (1) the individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and

    (2) the service is performed outside the usual course of the business of the employer; and,

    (3) the individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

    (b) The failure to withhold federal or state income taxes or to pay unemployment compensation contributions or workers compensation premiums with respect to an individual’s wages shall not be considered in making a determination under this section.

    (c) An individual’s exercise of the option to secure workers’ compensation insurance with a carrier as a sole proprietor or partnership pursuant to subsection (4) of section 1 of chapter 152 shall not be considered in making a determination under this section.

    (d) Whoever fails to properly classify an individual as an employee according to this section and in so doing fails to comply, in any respect, with chapter 149, or section 1, 1A, 1B, 2B, 15 or 19 of chapter 151, or chapter 62B, shall be punished and shall be subject to all of the criminal and civil remedies, including debarment, as provided in section 27C of this chapter. Whoever fails to properly classify an individual as an employee according to this section and in so doing violates chapter 152 shall be punished as provided in section 14 of said chapter 152 and shall be subject to all of the civil remedies, including debarment, provided in section 27C of this chapter. Any entity and the president and treasurer of a corporation and any officer or agent having the management of the corporation or entity shall be liable for violations of this section


    I say hit them over the head with their own pool sticks.

    If you only have a chainsaw, you tend to see every tree as a problem.

    by Sprinkles on Thu Feb 18, 2010 at 10:12:40 AM PST

  •  The MACC Commonwealth exception (0+ / 0-)

    The irony that MACC Commonwealth is listed as the example for outsourcing, and is lumped in under "lame suggestions", is rather rich with irony.  The agencies supported by MACC are all progressive social service agencies, ranging from micro to midsized (many of the large member agencies hold several small agencies under their umbrella).  The truth is that by "outsourcing" to a pooled resource like MACC everyone was able to get better service and afford to pay for highly qualified professionals on non-profit budgets.  Many of these non-profits couldn't and shouldn't support full or part-time specialized benefits administrators, accountants, etc. but that doesn't mean that the organizations and their employees wouldn't benefit from such expertise (MACC Members, for example, get great health benefits at affordable prices, unlike most small nonprofit employees).  This same principal holds true for many small and mid-sized local businesses (and isn't this true of the oft touted coop model--pool resources to achieve a goal).  Not all out sourcing is a bad idea.  Be sure to make the distinction.

  •  The Chamber of Commerce is full of shit (2+ / 0-)
    Recommended by:
    ItsSimpleSimon, CuriousBoston

    The IRS has extremely clear criteria for who is to be classified an employee and who is to be classified a contractor.

    I know, because this happened to me at a former workplace of mine. After they fired me, mostly because they found out I knew what they were up to, I filed an SS-8 form with the IRS for a determination, and was ruled by their investigators to have been an employee.

    That the Chamber would claim that the laws on the books are somehow unclear about this is a total and complete lie.

    It's our government now, bitches.

    by Devin on Thu Feb 18, 2010 at 10:20:30 AM PST

  • - yeah I like bidding against (1+ / 0-)
    Recommended by:

    against guys from India or Singapore that will do work for pennies on the dollar. Not!

    I've never bothered bidding on these websites, because the clients want something for nothing (most of the time) and many of the service providers bid at rates that I can't afford to meet.

    "be a loyal plastic robot boy in a world that doesn't care" - Frank Zappa

    by Unbozo on Thu Feb 18, 2010 at 10:27:06 AM PST

  •  As an IT worker I can vouch for some but not all (5+ / 0-)

    of this.

    IT outsourcing is an $4 billion industry a year industry, and companies have sprung up to assist it it's implementation like and It's become the predominant choice for major corporations in America.

    This is very misleading. It's certainly true that a great deal of outsourcing goes on in IT. It has always been the case, at least for the last 30 years of my own career.

    And for the last 15 or so, a lot of that outsourcing has indeed gone to India and other countries. However, major corporations do not use rentacoder and elance as is implied by this diary.

    They have an aversion to those because those are independent contractors who usually will work remotely. American corporations usually want someone in their own office with a phone and a desk, just as described earlier.

    The truth is actually even more insidious. Major corporations outsource to primarily to IT consulting firms who bring foreign workers here to work for little more than half of what their domestic counterparts are paid.

    Imagine if GM instead of opening a factory in Mexico, brought Mexican workers here to work in Detroit. The public outcry would be deafening. But do exactly the same thing with educated professional workers and nobody says a word.

    "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

    by Phil In Denver on Thu Feb 18, 2010 at 10:31:59 AM PST

    •  Indeed! (1+ / 0-)
      Recommended by:
      Alexandra Lynch

      I've seen American testers and coders marched out the door one day, and an Indian [typically] replacement brought in to fill the role less than a week later.

      -8.00, -8.26 "Fascism is capitalism plus murder." - Upton Sinclair

      by djMikulec on Thu Feb 18, 2010 at 10:39:00 AM PST

      [ Parent ]

      •  Dude, that's the humane version (2+ / 0-)
        Recommended by:
        Alexandra Lynch, CuriousBoston

        I can't count how many times I had to train my own foreign replacement before I was frog marched out.

        "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

        by Phil In Denver on Thu Feb 18, 2010 at 10:43:40 AM PST

        [ Parent ]

        •  Oh, I've seen that too. (1+ / 0-)
          Recommended by:
          Alexandra Lynch

          And had to do it myself, on one occasion. Fortunately, the company already had another position for me to fill so I wasn't let go. This went on for about six years before I was finally shown the door.

          But their off-shoring really didn't pick up steam until after the much publicized Microsoft decision back in '02.

          -8.00, -8.26 "Fascism is capitalism plus murder." - Upton Sinclair

          by djMikulec on Thu Feb 18, 2010 at 10:58:44 AM PST

          [ Parent ]

    •  It's huge, and it's not here (1+ / 0-)
      Recommended by:
      Alexandra Lynch

      ORM: Tracking Operations From Half a World Away, Part 2
      June 23, 2008
      The global business process outsourcing market continues to strengthen relative to the more mature IT outsourcing market and is forecast to reach $450 billion by 2012, according to a June report from BPO analyst firm NelsonHall. Within this massive outsourcing market exists a relatively small $500 million niche market for outsourcing relationship management software tools from emerging players.

      Here's a thought - parents won't have to worry about snow canceling school - all instruction will be on done online. Blocktime and sand-table time will have to be out-outsourced.

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Thu Feb 18, 2010 at 10:59:35 AM PST

      [ Parent ]

  •  Another thought on global outsourcing (0+ / 0-)

    In a global economy, it might make sense to outsource some activities that can be done cheaply elsewhere.  But there are activities that can't be outsourced--building (all types), local energy production, teaching, etc.  Unfortunately these are not where we spend our tax, research and investment dollars or where we encourage young people to pursue careers.  How many people have encouraged their bright student to consider a career as a plumber vs a career as a graphic artist or in computer support service--even though the plumber will get equal or better pay and will have greater job security? (Even in this economy good, smart, ethical plumbers are doing ok.)  Some of this outsourcing is due to the fact that we have chosen to emphasize white and grey collar jobs that exist in cubicles and in virtual networks, and have ignored some jobs and industries that can't be outsourced because we find them less desirable (plumber and other trades that are rapidly "greying"), are unwilling to support the work through our tax dollars (teaching, infrastructure development and maintenance) or we are unwilling to make the economic shift (local energy production).  The solution is not all about a new form of protectionism.

    •  That only makes sense if (0+ / 0-)

      you are truly outsourcing the work. But that is absolutely NOT what happens in IT, the subject of the diary.

      It's not about having work done in India or China because they can do it cheaper, it's about bringing Indians or Chinese here to displace local workers, while at the same time attempting to exert local employer based controls on them.

      American businesses who participate in this scheme are trying to have it both ways. And that is unfair competition no matter how you slice it.

      "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

      by Phil In Denver on Thu Feb 18, 2010 at 10:54:47 AM PST

      [ Parent ]

      •  I agree with you (1+ / 0-)
        Recommended by:
        Alexandra Lynch

        but several of the examples used in the diary were far broader--the MACC Commonwealth example (see my comment earlier up the thread).  I am all for treating employees as employees and fair compensation--I'd go for greater tax disincentives on income disparity, for example.  But "outsource" and "global economy" sometimes are used so broadly as the "enemy" that we miss other explanations and solutions.  

        But I get the example you are using.  That's not right.

    •  I told my son to do skilled trades. (0+ / 0-)

      Do an apprenticeship in skilled trades, and then do your accounting degree off your own money.

      But he wants to be an accountant. (sigh)

  •  U.S. Chamber of Commerce never heard of a worker (3+ / 0-)
    Recommended by:
    decembersue, Bob B, Alexandra Lynch

    who shouldn't be paid less by any means, legal or otherwise. The organization operates like a criminal conspiracy.

  •  Odd coincidence (4+ / 0-)

    Recent diary on the plane that crashed into the office building in Austin this morning includes a link to the guy's possible suicide note, and it appears that some of his issue was with IRS code as it pertains to conract workers.

    For you who are unfamiliar, here is the core text of the IRS Section 1706, defining the treatment of workers (such as contract engineers) for tax purposes. Visit this link for a conference committee report ( regarding the intended interpretation of Section 1706 and the relevant parts of Section 530, as amended. For information on how these laws affect technical services workers and their clients, read our discussion here (


    (a) IN GENERAL - Section 530 of the Revenue Act of 1978 is amended by adding at the end thereof the following new subsection:

    (d) EXCEPTION. - This section shall not apply in the case of an individual who pursuant to an arrangement between the taxpayer and another person, provides services for such other person as an engineer, designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work.

    (b) EFFECTIVE DATE. - The amendment made by this section shall apply to remuneration paid and services rendered after December 31, 1986.


    ·      "another person" is the client in the traditional job-shop relationship.

    ·      "taxpayer" is the recruiter, broker, agency, or job shop.

    ·      "individual", "employee", or "worker" is you.

    Admittedly, you need to read the treatment to understand what it is saying but it’s not very complicated.  The bottom line is that they may as well have put my name right in the text of section (d).  Moreover, they could only have been more blunt if they would have came out and directly declared me a criminal and non-citizen slave.  Twenty years later, I still can’t believe my eyes.

  •  Desk, phone and assignments...really? (2+ / 0-)
    Recommended by:
    Futuristic Dreamer, canoedog

    I'm an independent contractor as a software architect and agile coach/mentor. I have my own S Corp and pay employee and employer portions of FICA and Medicare taxes.

    For EVERY GIG I'VE EVER HAD...I get a desk, phone and assignments as part of the project.  I can say when I want to work from home and take vacation but a desk and a phone are part of HAVING A PLACE TO WORK ON THE PROJECT.  That is ridiculous that that would be part of it.

    There is some law regarding assignments but I look at that as that I have say over when I go in or not and can turn down work without impunity (they can let me go from the project).

    The simple thing is that someone pays taxes - either the company does (and you are an employee) or you pay them as either a sole proprietor or a corportation (or W2 employee of a placement company).

    Just look at who is paying the taxes and make sure everyone is clear about it.  If your not being clear about it then you are cheating the system.  Its really not that hard.

    But "a desk, a phone and assignments" is freakin' dumb and kills contracting/temporary placement companies.

    •  Yes (2+ / 0-)

      Well said. If your doctor made housecalls, you'd provide a chair.

      The primary downside of legitimate contract work is access to health insurance that is reasonable.  But contract work is great for many people as long is it is clear and compensation is adjusted to reflect who is taking on the "risk" (taxes, unemployment, etc).  That's not to say that it isn't abused (Fed Ex certainly) but it's not automatically a bad thing.

      •  healthcare (2+ / 0-)
        Recommended by:
        Catte Nappe, Futuristic Dreamer

        I'm fortunate to get it through my wife but this is exactly why I'm a strong proponent of a public option (or single-payer).  Its also part of why we are considering moving to Switzerland.

        I didn't realize that many companies are tricking people into becoming sole proprietor (aka independent consultants).  That is really a firing and new contract.  You would think that they could easily see that by looking at employment numbers and 1099 forms.

        But yeah, healthcare is the biggest downside to being independent.

        •  Or German or Swiss models (0+ / 0-)

          I think there are several models beyond British or Canadian systems.  I'm with you, we need something universal, simple, and comprehensive in order to free up labor from corporate control (Freedom means my employer controls my health insurance. Really?)

          •  here here (1+ / 0-)
            Recommended by:
            Catte Nappe

            when I lived in England, there were lots more independents because health insurance (and pensions) aren't tied to your employer.

            I saw many folks that went to the US for work and came back to the UK because of lack of healthcare.  That is alot of entrepeneurs (sp?) and businesses that have left the US because of our policies.

            But, yeah, the Swiss, German, Canadian and UK systems are all a bit different - I'd actually be very happy with a Swiss or German system here in the US.

      •  It's only great when (2+ / 0-)

        the economy is humming, at times like this it ain't that hot. Plus it's getting harder and harder to compete with those IT consulting firms that bring in foreign labor to work for half what we do.

        "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

        by Phil In Denver on Thu Feb 18, 2010 at 11:08:59 AM PST

        [ Parent ]

        •  cost / quality (0+ / 0-)

          I think people are just starting to understand that the quality can be so bad that the cost doesn't make up for it.  Unfortunately the top folks don't get that.  They can see the cost benefit right away (on their time and credit) but when the quality problems hit they are long gone and those problems are not reported like the cost successes are.  They are never held accountable for the destruction that it does the company.

          Its getting to the point now where the offshore vendors are coming back to the US and hiring people because that helps them produce a better quality product.

          And no one thinks to just take out the middle man!

          At some point we will need top-level folks that cleanup this crap.  I'm just starting to see that happen.

    •  Then I have news for you (1+ / 0-)
      Recommended by:

      You've never really been an independent contractor. You let your defacto employers bullshit you in to believing you were, but in reality you were just an unbenefitted temp.

      To maintain true independence you would have to be able to do your work from your own location without being assigned a desk and a phone. God it's so ridiculous.

      When you hire an attorney or an accountant do you provide them a desk and a phone? Hell no, they work at their office.

      Oh sometimes they might come in to the client office, especially an accountant, but that doesn't mean they are assigned a desk and a phone.

      "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

      by Phil In Denver on Thu Feb 18, 2010 at 11:18:09 AM PST

      [ Parent ]

      •  squeeze me? (1+ / 0-)
        Recommended by:
        Futuristic Dreamer

        I'm not a sole proprieter - I've got a separate corporation.  They aren't my employers - they are my clients.  I work on their projects and would prefer to be located next to my other project co-workers and have them have access to me (the phone).

        My independence has to do with the fact that I work for myself and set my own hours, salary, holiday schedule and don't have to deal with my client's silly HR games.

        I went independent because I can make more working for myself than working for a consulting company that keeps a hefty portion of the money.  My marketing work is now for my benefit and not someone elses.  I own my own work product.

        Sorry that doesn't qualify as "independent" for you but it sure as hell does for me.

        •  Dude, I've been and Indy for 15 years (0+ / 0-)

          on and off, I've had at least three different corporations in that time, as well as a couple proprietorships and an LLC as well as an alien corporation. You are not the only one here. If you think you set your own hours, try not showing up during a major deployment of your code. Then you will find out just how independent you really are.

          We all become indies for the same reasons, but just because we consider ourselves independent and figure we have some additional flexibility, doesn't mean we really are.

          The bottom line is, if we report to a project manager, or a manager of any kind, we are not really independent. If the client assigns a machine to work on, a desk to sit at, and a phone we have to answer, sorry but that's not real independence. If you have to work during their business hours, that's not independence. If you work entirely from your own home or office, and only when you choose to, and only come into the client office for the occasional meeting, then yeah you are an indy. But if you work there at an assigned station, sorry but that ain't it, no matter how many extra perks you get for not being on their payroll.

          Those people working on GAF and Elance from Bangladesh for $5 an hour, THOSE are real indies. They work ONLY in their offices and on their schedule. They work for peanuts and that's what it is to be truly independent, because nobody is going to pay you that big $70 an hour rate and let you tell them when and where you are going to work.

          "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

          by Phil In Denver on Thu Feb 18, 2010 at 06:35:06 PM PST

          [ Parent ]

    •  i have no idea what the note has to do (0+ / 0-)

      with the original of this diary but to put any CT to bed, LE (law enforcement) always requests and gets a takedown of a murderer's website or suicide note etc almost as soon as its found.

      Standard practice, has been for years, be it a serial killer, a man who has shot his family up or a pedophile or a guy who flies into a building.
      I follow crimes and cases on another blog and its always a race to get the screenshot or the info from a suspects FB or website before it disappears.

      So technically yes, they deleted it but it has nothing to do with politics, there are few times such a thing is left up.

      Partly because they want to be certain they have the right person as well.  I do remember one case where it was not taken down for at least 6 hours after a POI was named (person of interest) and people found "his" site.  Talk about abuse hurled at an innocent man, and family/friends on the site believing he was the one named when in fact it was someone else who was a registered sex offender.  So also for that.

      Barack Obama: "Dr. King said, "We must accept finite disappointment but never lose infinite hope." Jan17, 2010

      by vc2 on Thu Feb 18, 2010 at 05:53:13 PM PST

      [ Parent ]

    •  I don't have a phone at work (0+ / 0-)

      and my desk is a Goodwill reject, but as a teacher I have paid sick days, full insurance coverage and the intellect to wonder why you are sensitive about the quote.

      Please explain.

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Thu Feb 18, 2010 at 06:17:03 PM PST

      [ Parent ]

  •  This trend has been going on for some time (2+ / 0-)
    Recommended by:
    Chirons apprentice, marabout40

    at least 10 years, that I know of. In fact, I think it started to gather steam under the Reagan Administration, noted for its utter disdain of ordinary employed persons.

    UPS was one of the ones that came to my attention early on, promising a sort of trial period of part-time work, which, the prospective employee was told, would lead to full time, with all sorts of benefits the part-timers didn't get.

    Pure blowing of smoke up the nether parts !

    I can't recall, of the numerous men (always), I talked to about their hoped-for full-time UPS employment, a single one who ever achieved that status.

    I must be dreaming...

    by murphy on Thu Feb 18, 2010 at 10:59:35 AM PST

  •  OK, I just had a weird experience. (5+ / 0-)

    I was going to tell you about how I was once misclassified as a contractor, and my misadventures with the IRS and Social Security as a result.

    But a small plane just crashed into the very building in Austin, Texas, where the IRS raked me over the coals about 15 years ago, and I don't feel like talking about it online right now.

    Cue the creepy music.

    "The difference between the right word and the almost-right word is like the difference between lightning and the lightning bug." -- Mark Twain

    by Brooke In Seattle on Thu Feb 18, 2010 at 11:08:43 AM PST

  •  Elance, odesk, rentacoder (2+ / 0-)
    Recommended by:
    decembersue, Brooke In Seattle

    98% of the time you will get someone who doesn't really know what they are doing.

    If you just want some crappy website for $300, or want someone to write you an excel macro, or do some data entry, then those are great options.

    If you care about getting a good product, then you get what you pay for usually.

  •  My software company has a no-contractor policy (5+ / 0-)

    and somehow, we manage to stay in business. And get this, our CEO even refused to ask for tax-increment financing or tax breaks when we moved to our new campus in the twin cities. He thinks it's wrong for companies to not pay taxes in the cities in which they sit.

    We're doing ok right now, even in the middle of this deep recession.

    So I guess my question for people who use these tactics to screw employees is,

    what's your excuse?

    •  They label their employees "interns" (0+ / 0-)

      and then call it "Community wealth" when they lay them off.

      So we get to see the community benefiting from the wealth of their parents who have to support them until they get rehired.

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Thu Feb 18, 2010 at 12:18:25 PM PST

      [ Parent ]

      •  Uh, no, we do not do that (1+ / 0-)
        Recommended by:
        Catte Nappe

        please don't accuse my company of doing things that we haven't done. You don't even know what company I work for. Good grief.

        We have interns here, and they stay for about 4-5 months, and the guess what happens?

        We hire about 95% of them.  Full time. Full benefits. Best deal a 22 year old will get these days. We have hired 3 in the last few months in my dept - in fact, that would be 100% of what we've had in the last year. I'm not sure that we have ever not hired an intern - the only one I can think of that wasn't hired left to pursue an academic opportunity.

        Not every company is out to screw its employees. My point is that if we can do that, nobody else has an excuse.

        And interns are an incredibly important part of getting young people into the workforce, which they are basically shut out of in most companies.

  •  oh thank you my president, (2+ / 0-)
    Recommended by:
    fivefouranonymous, marabout40

    this categorization hurts everyone in so many ways. make the perps shake with fear, and add this to the evidence that this will be the year of "The Big FAIL" for them and so many other home-invaders of Pluto [residence of Republicans per BiPM].
    and no, i don't feel like making myself clear today. sorry.

    The Addington perpwalk is the trailhead for accountability in this wound on our national psyche.--Sachem

    by greenbird on Thu Feb 18, 2010 at 12:16:50 PM PST

  •  Plays right in to another issue (5+ / 0-)

    in the American job market: age discrimination.

    We all know workers under 40 are just, well, sexier and cuter and faster-moving and more interesting :) and stuff then older workers.

    One more thing that's little-discussed: they're typically way easier to exploit than over-40s.

    They'll work for less, and they make fewer demands. They're generally more trusting, and they're less apt to have big expenses, like a house, and kids to put through college.

    Pick up "Bait and Switch," by Barbara Ehrenreich. Required reading.

    Thanks for the diary.

    •  You've obviously never worked in IT (3+ / 0-)
      Recommended by:
      Sprinkles, pkbarbiedoll, karmsy

      In IT it's just the opposite. Age descrimination is rampant, with a severe bias against anyone over the age of 40.

      I'm one of the lucky ones, I've made it to the ripe old age of 49 while still working in IT, but I will probably have to retire from IT this year.

      "crush in it's birth the aristocracy of our monied corporations which dare already to challenge our government" -Thomas Jefferson

      by Phil In Denver on Thu Feb 18, 2010 at 12:48:41 PM PST

      [ Parent ]

    •  Training Failure (3+ / 0-)

      Another problem that converges with age discrimination is the idea that technology changes rapidly: therefore young people who are fresh from education are regarded as having the latest skills.

      There is also gender discrimination. Several years ago I worked in a technical setting. There was an Indian guy hired at the same time as me. We both worked on a web site, and the Indian guy often asked me how to do technical things because it wasn't his area of expertise. Yet he was called "technical" because of the Indian computer programmer stereotype while I was regarded as a soft-skills web designer (none of the work involved design - content manager probably would have been a better description).

      Many job descriptions seem written to expressly avoid female candidates. They also often emphasize skills that are proprietary to the company IT architecture. While anyone could learn the skills required in a short time, this wording prevents people from applying.

      Other countries offer cheap or free computer skills training: Microsoft has set up whole education complexes in India! In the US we charge a small fortune for higher education, and then let people loose after that. There needs to be more re-training and greater effort to connect people with jobs through the "new technologies" veil.

  •  The New Slavery (4+ / 0-)

    While the labor code provides extra special loopholes for computer related work, this is the problem with temping in general. Even if you eventually get hired, the temp job is not counted toward probationary period, so the company can escape paying benefits for another 6 to 9 months.

    Congress should take an extra close look at foreign or multinational corporations who cheat the labor laws, often at the expense of the poorest most vulnerable members of society who can only get "flexible workforce" jobs.

    One company that I have worked for and suspect of illegal practices at Bayer. In the department I worked for they had temps who had worked there for 2 to 5 years. They had permanent cubicles and did highly skilled work that took months of training. The justification for calling them temps was they worked on projects for different departments.

    I realized that this was a perma-temp situation soon after I started working there, and since I was trying to get a full time job with health benefits, I decided to leave once my contract period was over. However, at the end of my contract, my temp agency "extended" my contract without permission, even though I had already informed them I wanted to leave. The temp agency claimed they could extend the contract without my permission.

    I stayed because work was scarce, and I didn't want to alienate the temp agency. Every time my contract was up I requested to leave. Every time the temp agency extended it again. After all Bayer had already invested in my training and the client "needed" me (but not enough to actually hire me as an FTE). This went on for a year, and it probably would have gone on longer if the particular project I was working on hadn't concluded (and the manager I was assigned to transferred/demoted).

    This year was incredibly depressing: I felt trapped in a job without benefits and without prospect of being hired. I lived with mounting health problems because I really needed that health insurance (see my current Health Care Access diaries).

    Of course any job is better than nothing, and I was being paid (though pathetically for the skills involved). But it felt like slavery. One could argue that slaves were paid in food in lodging. They were slaves because they weren't free to leave and change their condition. This is what Bayer did to me for a year, and was doing to several other people right in my immediate area. The people who had worked there for 2 to 5 years should have been re-classified as full-time employees with no probation period necessary.

  •  FEDEX ...nuff said.. n/t (0+ / 0-)

    there is never time to do it right, but always time to do it over -6.88/-4.31

    by DeadB0y on Thu Feb 18, 2010 at 02:22:49 PM PST

  •  Here in Tennessee I know people who have worked (3+ / 0-)
    Recommended by:
    shigeru, Futuristic Dreamer, sherijr

    as temps for 5, 6, 7 years or more now.  They will most likely never be hired permanent because the companies they work for would then have to offer them health insurance, paid holidays, vacation, etc.  It's amazing to me how these companies get away with doing this.

    "All I wanna say is that they don't really care about us." - Michael Jackson

    by BlackQueen40 on Thu Feb 18, 2010 at 02:55:17 PM PST

  •  obama has a *tainted* history with this (1+ / 0-)
    Recommended by:
    Betty Pinson

    in 2008 during the campaign he hired "chacha," a mobile search engine/advertising company to do some ads for the campaign. details here

    during the same year, chacha dropped its independent contractor fee to 10 cents per question.

    how does this work?

    a person works for chacha on their underground site and answers questions sent in by mobile phones. each qualified answer is award 10 cents to the answerer. if you are lucky, you might approach minimum wage during the course of an hour.

    the obama campaign took advantage of the low cost advertising inherent in the question-and-answer scheme. answers were sent with tiny advertisements attached to the text -- such as "vote for obama on this and this date."

    i am glad to see the administration ending this sanctified slavery that is "independent contractor" work, but they have a spotty history themselves.

    •  Impossible standard (3+ / 0-)

      You can't hold anyone to a standard that says you can't do business with companies that use contractors.  This practice is rampant in software development so the product you used to type this post was probably created by a company that uses permatemps.  

      •  i didn't say that (0+ / 0-)

        this is an extreme example - 10 cents per question, maybe a couple dollars an hour? - and the campaign was connected with it. i was making the point that the business of independent contractor use can be quite horrific for workers economically and yet it rather goes unnoticed everyday (so much so that the most progressive campaign in history was connected with this company in Advertising of all things). you made the point for me even better -- this text exists because of the IC system.

        it's often the last resort for workers. i know too many friends who have been stung by this crap at the end of the year, including myself. there should be more information generally about it. i make the point of the obama campaign to show how rampant and yet under-the-radar this practice is.

  •  Contract work can be legit (0+ / 0-)

    I work in IT and I've worked as a contractor and at times that has been a good deal. The question is how much you get paid. My hourly rate was half again as much I now make working as a full time employee.

    So having to pay my own ss and medicare plus benefits was OK, because I could afford it.

  •  Been there, done that, bought the t-shirt (2+ / 0-)
    Recommended by:
    Sprinkles, Charles CurtisStanley

    and wore it to shreds.

    That is part of how a company ripped me off for over $8000 in back pay that they never paid, ripped me off by not paying taxes, ripped me off by not paying Social Security (which I had to catch up on), and ripped me off when they canned me by not paying unemployment insurance during the months I was employed by them.

    They set my hours. They assigned me a desk and a phone number. They set priorities and assigned tasks. They mandated that I work 20 hours a day and sleep in a hotel of their choosing on their dime less than a week after I got married (despite the fact that we only live an hour away). In short, I met the definition of an employee, not a contractor, except for that one obscure rule the IRS crasher cited. Like him, I was an engineer. Not a civil engineer but a software test engineer (which falls under the same heading as and is closely related to "computer programmer"). Loophole city. That goddamn company never paid me a dime after about early March 2004 and were in arrears then, and owed me over $8000 in back pay when they canned me. The reason they canned me, though they made a point of denying it (although I had not brought the subject up the day they canned me), is because I demanded my back pay. They went out of business owing a lot of former employees far more than they owed me and nobody got anything, or unemployment either.

    If you are ever asked to work for a company owned by a man named Scott Wallin, run. Run the other way, and tell everyone you know to do the same. Do not work for that man. You will wind up in the same boat I was in. Run fast and far.

    Living kidney donor needed; type B, O, or incompatible (with paired donation). Drop me a note (see profile).

    by Kitsap River on Thu Feb 18, 2010 at 06:05:41 PM PST

    •  Unions - the power of the group (2+ / 0-)

      I'm proud to be a member of the NEA, the CEA and the BEA.

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Thu Feb 18, 2010 at 06:56:48 PM PST

      [ Parent ]

      •  Never had the opportunity (0+ / 0-)

        Had there been a union or even any union organizing any place I've ever worked, I would have been a part of it.

        Doesn't happen in software. Didn't happen for bank tellers. Didn't happen for photo store clerks.

        There are an awful lot of professions that have no union representation and there seems to be no real effort to change that. The union that purports to represent software folks doesn't bother with union organizing and has no teeth.

        Living kidney donor needed; type B, O, or incompatible (with paired donation). Drop me a note (see profile).

        by Kitsap River on Fri Feb 19, 2010 at 04:25:54 PM PST

        [ Parent ]

  •  This is an odious hustle (1+ / 0-)
    Recommended by:

    that corporate America has been using for decades. Glad to see the administration trying to take it on. I am not real optimistic about it ending any time soon, but Godspeed just the same.

    "Democracy is like chicken soup. You have to stir it up often or a scummy oily film forms at the top."

    by StratCat on Thu Feb 18, 2010 at 06:21:55 PM PST

  •  re: update (0+ / 0-)

    SECOND UPDATE (getting weird here, folks): The suicide note has been deleted by the government,  but can be found at The Smoking Gun.

    umm... what the hell? from the website:

    This website has been taken offline due to the sensitive nature of the events that transpired in Texas this morning and in compliance with a request from the FBI. Although the customer exceeded their bandwidth limits earlier today, due to numerous requests, we have added credit to this account to keep this site live for informational purposes.

    the "government" didn't "delete" anything. the FBI is investigating and the website voluntarily shut down per their request. the hyperbole really isn't necessary.

  •  Health care bill makes everybody a "contractor". (0+ / 0-)

    One of the main benefits of employment vs. contractor used to be health care but with the Democrats health care bill, health insurance is totally optional for companies.

    One note, outsourcing is not the same as hiring contract workers. Typically you outsource to another company which pays its employees.

  •  Once upon a time (1+ / 0-)
    Recommended by:

    I graduated from college and went to work at a Fortune 500 company as an Engineer. After 4 years or so I left to see the world (I was on the uphill side of the draft and didn't need to get more of those Cheneyesqe deferments). During part of the next seven years I worked as a contract engineer under the rules as they were then--the Contract Broker hired me at a relatively low salary, but with benefits--and then hired me out to a different Fortune 500 company, where I worked as a Drafter but since I didn't plan to work there very long anyway I was fine with that. After seven years of seeing the world, doing some school, writing a book, etc. I moved back to the city of the first F500 company and looked for work.  Amazingly the first job I found was with the F500 company as a Contract Engineer in the same department I had previously worked for. Since I had the experience, I survived the inevitable Contractor purge at the end of the year, and after a year or so was able to hire back in Direct to the F500 company. My only mistake was starting at the same salary direct as I had gotten as a Contractor--it put me behind the salary curve and took about 10 years to catch up. But I continued to work for that company for another 29 years or so and retired with usual benefits, 401K, etc. I'm still struggling to survive in today's environment, but that is another story.

    My point in telling this story is that this was all before 1986, when they changed the rules. I did fine as a Contractor then. But after 1986, when I was working direct and actually hiring those contractors to work for me, it was a different story. The contractors were essentially screwed, even though we tried to treat them well, but because there was a strong Engineers Union, and the company back then was relatively ethical (in another story, they seem to have lost that ethical scense in the mid 90's (or else I got disillusioned and saw thru them after the f**ked me over.))

    My final experience with all this was after I retired, when they needed to hire me back to fix something that I had installed that was broken. It seems that they couldn't just hire me as a contractor, because of the Union pressure, but needed me to hire in thru another company who would have to hire me.  I found a company to do it, but they put me on a 1099, and then got audited by the IRS. The result was that I had to submit a copy of my Income Tax return proving that I was paying Self Employment tax on the 1099 money, so they wouldn't get into trouble. I had no problem with that, but it was a pain and a hassle.

    At least they didn't offshore my job--but they did send a lot of the work to other states and to other countries. I always believed that was justified since the F500 company is the US's largest exporter and has to do some work where the customers are. However, they are definitely getting worse as more of the sales go overseas.

    "There's an old country saying: The water won't clear up until you get the hogs out of the creek." - Sen. Byron Dorgan

    by Earwicker23 on Thu Feb 18, 2010 at 07:45:54 PM PST

    •  the NY Times has a good description (0+ / 0-)

      of the tax law - Section 1706 of the 1986 Tax Reform Act and how it forces people to become company employees and takes away professional growth and freedom to increase their earnings.

      Harvey J. Shulman, a Washington lawyer who represented companies that supported the desires of software engineers to be independent contractors, estimated that the law currently affects at least 100,000 such people.

      "This law has ruined many people’s lives, hurt the technology industry, and discouraged the creation of small, independent businesses critical to a thriving domestic economy," Mr. Shulman said in an interview Thursday. "That the law still exists — even after its original sponsors called for its repeal and unbiased studies proved it unfairly targeted a tax-compliant industry — shows just how dysfunctional and unresponsive Democratic and Republican Congresses and our political system have been, even on relatively simple issues.

      If you only have a chainsaw, you tend to see every tree as a problem.

      by Sprinkles on Fri Feb 19, 2010 at 04:24:41 AM PST

      [ Parent ]

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