I started working as a full time W-2 employee for a small business owner in 2003. I'm the only full time employee. Four years being W-2 my shady boss moves her business in her home. She did not have a permit to run her business from her home and started to get in trouble so she changed me to 1099 so it wouldn't look like she had an employee working from her home. She did give me a raise to help pay for the taxes I would be responsible for. I did not have a choice in this matter and she told me I could not do any other work for another firm, also I did not sign a contract. I've been 1099 the last 2 years and nothing has changed. I work at her house 8-5, I get paid twice a month and I use the computer/printer/fax at work, my business cards has her company name with info. The only difference is I get paid as a 1099.
My question is, with this hard economy and lack of clients I'm worried I could get laid off. Would I be able to get unemployment if I prove these things? What is the process and what would happen to my boss? I hate to get a bad reputation in the industry but I feel like my rights were taken away and I should be able to receive unemployment if needed.

If you are filing 1099 then you are a sub-contractor or self-employed and not eligible for unemployment insurance. Sorry.

What is the process and what would happen to my boss? I hate to get a bad reputation in the industry but I feel like my rights were taken away and I should be able to receive unemployment if needed.Hello D:

Nothing would happen to your boss. She broke no law that I can see. Although you think she did something illegal when she moved her business into her home, you surly haven't given me reason to think so. She didn't need to change you from an employee to a subcontractor to avoid anybody finding out about you working there, because NOBODY would be interested in your employment status.

You say you had no choice, but you did. You could have objected, and found new work if she fired you. You didn't.

excon

There are Federal and State laws that specifically describe what a sub contractor is AND what they are not.

A few of those are;

The sub contractor has his/her own company.

They provide all the necessary 'tools' to do the job.

They are not restricted by 'hours' during the day, in other words, you cannot say that they will work 8 to 5.

The sub contractor has to submit an invoice to be paid on a 1099 to the 'contractor' (company).

The contractor can supply 'specifications' to the sub contractor for the job to be done but cannot supervise and manage a sub contractor on an hour by hour basis.

There are more regulations set by the State and Feds. You can go on-line with your State and look for 'sub contractor.'

When I started my business I used some sub contractors and paid fines and penalties for doing so, quite a lot. I had to go to numerous 'meetings' with the State to rectify the problem. And now, for many years, all my workers (298 total) are all salaried or hourly.

Also, when this happened, the 'investigators' came into our office. We had to supply all information pertaining to payroll and applications. They were there for two and a half weeks and literally shut down our day to day operations. So we had the loss from that two weeks plus the fines and penalties. I won't divulge the total amount but suffice to say it was in the thousands of dollars.

We were wrong but we didn't know any better as this was a 'grandfathered' in thing in my industry for decades and most of our competition were doing the same. We paid above the competition for years and that doesn't matter.

As I said we corrected the situation immediately and it cost us in many other ways also. Not worth it at all.

Stringer

Well I will disagree you can say that a contractor will work certain hours,

For example, if the contract that the 1099 agrees to work under is specific that the work has to be done between the hours of so and so.

In a larger scale for example a company bids on a janitorial service that has to be done after the business closes and so on.

Not trying to be combative Chuck, seriously. I am only going with my direct dealings with our attorneys, State Officials and many, many hours of 'informative' meetings with all of them for over a period of many months.

Yes, you can state that the work is specific and that it cannot start until after a certain time such as when the client's' staff have left the building. This is something that is required to do the job properly without interference from others. But according to all the personal experiences that I went through; you cannot direct the sub contractor on an "hour by hour" basis. You can only list things that are to be accomplished for the job to be done/accomplished properly.

And yes, if there is a small window of available time to do the job then you can give the subs these hours on this specific job, but not in general or as a mandate for other jobs...

I suppose that State Laws could vary some, but I don't think by much. Remember that one of the things the States want is to collect withholding taxes from every paycheck and this does not happen in all cases with sub contractors. They pay quarterly (yeah) or at the end of the year when they receive their 1099's

I paid a lot of money directly to learn this lesson. We even hired 'expert attorneys' in addition to our own that were specialists in these matters. :)

Stringer

State Law must rule this - I HAVE 1099 employees and in certain instances I AM a 1099 employee. I was also audited (in 2002). I am allowed to set hours - for example, "you must complete these tasks between 8AM and 5PM." I believe the NY case that made law in this instance concerned a cleaning person, a 1099, who decided to clean an office during the day while employees were on the job. The employer was allowed to make it a 7PM-7AM job.

Of course, at the moment I can't FIND that case - !

Hi Judy,

How are you?

Possibly the laws vary some from State to State as I suggested, however my circumstance in Illinois was documented in a 'decision' letter from the State. But I can see where determinations can vary by State.

Thanks Stringer for sharing your past experience. I didn't realize how in depth it can become. I spoke to an attorney who said that with the proof I have it should be no problem to collect unemployment but I was still curious how it would effect my boss. Thanks

You're welcome Dan,

In our State (Illinois) people that are sub contractors AND have signed a sub contractor agreement stating all the rules and regulations required are not eligible to receive employment compensation. Unless they can prove that they did not sign or cannot speak and or read the contents of the agreement. Or if the agreement in some way is not valid.

I wish you success in your State Dan...

A contract doesn't exist. I was just told one payday that I was going to be paid as 1099.

Thanks Stringer for sharing your past experience. I didn't realize how in depth it can become. I spoke to an attorney who said that with the proof I have it should be no problem to collect unemployment but I was still curious how it would effect my boss. Thanks


I don't know how you can collect unemployment benefits from a company that didn't pay unemployment taxes - not in NY.

Curious to see how this plays out.

Some years ago I was a 1099, left because the "employer" broke contract, could not collect Unemployment because Unemployment Taxes had never been paid - again, in NY.

Curious -

I don't know how you can collect unemployment benefits from a company that didn't pay unemployment taxes - not in NY.

Curious to see how this plays out.

Some years ago I was a 1099, left because the "employer" broke contract, could not collect Unemployment because Unemployment Taxes had never been paid - again, in NY.

Curious -

It is interesting, but maybe since he didn't sign a contract and it is only verbal, he can possibly take a position that it was never explained properly to him, which it seems, they will probably then go after the employer.

This may not be the approach that you want to take though as you stated that you did not want to 'harm' your past employer..

And even though the company did not pay the tax they may be investigated and have to come up with something plus any fines and penalties.

Stringer

You're welcome Dan,

In our State (Illinois) people that are sub contractors AND have signed a sub contractor agreement stating all the rules and regulations required are not eligible to receive employment compensation. Unless they can prove that they did not sign or cannot speak and or read the contents of the agreement. Or if the agreement in some way is not valid.

I wish you success in your State Dan...

DaniceK said that there was no written contract, I believe.

And in any case it would have been signed under duress.

By the way, how does she figure she can prohibit you from working for a competitor, DaniceK?

If push came to shove, I would file an unemployment insurance claim and let the chips fall where they may. Your boss may get in trouble (for fraudulently evading the employment taxes through the 1099 gambit), but so be it.

Yes, I realize that he didn't sign a contract as per his post #11 and mine, #13.

My point was that he doesn't want to 'harm' his past employer, and if that IS the case, then I don't see many options.

Stringer

My boss has not exactly run her business honestly and has screwed me many times along the way. The only reason I wouldn't want to harm her is for fear of her using her power and giving me a bad name in the industry. I now realize if she gets in trouble it is not my fault.

You can still get unemployment. Because you must have been an employee for the base year from the time you filed. So if you file in April, then the state unemployment looks at the last twelve months that your were an employee.

But if she fires you for misconduct, you will not be eligible.

Check the unemployment laws in your state.

You can still get unemployment. Because you must have been an employee for the base year from the time you filed. So if you file in April, then the state unemployment looks at the last twelve months that your were an employee.

But if she fires you for misconduct, you will not be eligible.



You cannot collect benefits from a system you never paid into.

You posted twice, two different answers.

Your employer was paying you as an employee and you received a W-2, she then switched you to a 1099 to avoid paying taxes. You can get form SS-8 from the IRS, upon the facts you stated, the IRS would rule in your favor, and you could file amended returns to get the half the self employment tax back that you paid, and your employer would then be liable for SS and medicare tax, and would owe your state's unemployment for the amount she should have paid in plus interest & penalties. By doing this your employer will probably get pissed, but she is avoiding taxes, at your expense. You have to fight for your rights!

I don't see this to be a guaranteed result of filing with IRS. OP likewise has a responsibility to ask to be paid as an employee, not as a 1099, if the circumstances allow. Going along with the 1099 right up until it becomes inconvenient is not going to endear the OP to the IRS.