So I recently got "laid off" working at a company (in California) for which I have been working full-time, for over 2 years. I have been getting paid an hourly rate, and have been filing a 1099 for the first time, for 2 years. Per the company owner's request, I have been sending him an invoice with my hours at the end of every week and receiving the amount in full with nothing removed for social security, etc.

The person who did my taxes last year informed me that legally I should be an "employee". A) due to the amount of time I have been working there AND b) because my job duties and orders, according to the IRS guidelines, qualify me as an employee and NOT an independent contractor.

Obviously I'm currently unable to receive unemployment under these circumstances and I am curious to know what my rights are... I am wondering if I could possibly revise my 2010 tax filing and change it from being an independent contractor. And, if so what would be the consequences, for me, for the company, etc.

I appreciate your advice. Thank you.

You "might" qualify as an employee, but that doesn't make you one.

This lists the factors uses to determine:Tax Topics - Topic 762 Independent Contractor vs. Employee


You don't list enough details for me to advise which. But you can't go retroactive here. You can't decide whether you were an employee or contractor in the past, just because its more convenient. You accepted the role of IC by invoicing your employer.

I did not know about this until this past April when filing my taxes. It seems to me I have been fooled by the employer into sending invoices and not thinking any more of it. Isn't this wrong on the company's behalf?

Based on the IRS Topic 762:

I definitely have been under "Behavioral Control"; I have regularly been directed on how the work is to be done, through instructions, training, and other means, just like a regular employee would be.

In regards to the "type of relationship":

I had been given the title of Manager and have been given company business cards too. Also, the services I performed were a "key aspect of the regular business of the company".

You can report the company to Federal and/or State Wage and Hour - but it appears that you consent to being a 1099 subcontractor until you were terminated/laid off at which point you wanted to be an employee of the company. You are responsible for conducting your own research.

As Scottgem said, you billed your employer for your time. That made you an independent. Were you fooled/tricked, something in between? Possibly. Should your accountant have advised you of the pitfalls of being an independent contractor? Possibly.

Not saying you behaved in this manner BUT it is very easy to be a 1099 and pay only SS taxes. The problem arises when you need unemployment or workers comp or something along those lines and have no coverage. Then no one wants to be an ic.

Agree with Judy. There is also the issue that you might have had NO job if you didn't accept it as an IC. If you report it to the IRS, the employer might be fined, but you will not have your status changed or be able to recover anything. And the employer may try to blacklist you.

You can not just "change the way you filed the taxes" it does not work like that. And it should have been told to you that you were a independent contractor, as such you were not covered under unemployment or even workers comp had you got hurt.

Also you were not "laid off" but your contract was discontinued.

A contractor can bill for their work by the hour, so even that does not change things. Also normally a person who is a independent contractor gets a higher hourly amount, since you are having to pay the full amount for all of your taxes such as social security and the such

Good catches, FrChuck. There is no lay off.

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Originally Posted by Fr_Chuck

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Also you were not "laid off" but your contract was discontinued.
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Originally Posted by JudyKayTee

Good catches, FrChuck. There is no lay off.

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:)
Mere semantics.

The "employer" evaded taxes by claiming the "employee" was an "independent contractor".

OP was, de facto, laid off.

No, he was not laid off. His contract was discontinued. Two distinct different scenerios here. He can't collect or file for UE benefits due to the fact no taxes were taken out of his salary. Sure the employer evaded the tax situation but the OP is still an independent contractor period.

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Originally Posted by twinkiedooter

No, he was not laid off.
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Sure the employer evaded the tax situation but the OP is still an independent contractor period.

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"employer"?

Not by your reasoning.

"person with whom the independent contractor had a contract"

:rolleyes: