ML
    • Recent
    • Categories
    • Tags
    • Popular
    • Users
    • Groups
    • Register
    • Login

    W2, the IRS Test, and Who Do I Work For?

    Scheduled Pinned Locked Moved IT Discussion
    38 Posts 4 Posters 955 Views
    Loading More Posts
    • Oldest to Newest
    • Newest to Oldest
    • Most Votes
    Reply
    • Reply as topic
    Log in to reply
    This topic has been deleted. Only users with topic management privileges can see it.
    • scottalanmillerS
      scottalanmiller @Dashrender
      last edited by

      @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

      Google, doesn't have to give these contractors the same benefits that they provide their direct hires.

      Key word. Contractor vs FTE simply requires that they be two different pools. I was a full employee of the bank, with benefits. But not the same benefits as the FTEs. The FTEs had a single benefits pool as determined by HR. I had benefits that were negotiated just with me. So I could negotiate whatever mix of things worked for me, FTEs got whatever HR offered. Take it or leave it.

      1 Reply Last reply Reply Quote 0
      • scottalanmillerS
        scottalanmiller @Dashrender
        last edited by

        @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

        It's apparently so bad that people who work for the same team, some direct hires some consultants, it's not uncommon for there to be a company function that the direct hires all get informed of and are allowed to attend (typically on company time) but the consultants frankly, are not.

        This is common and expected. If you let the contractors go to FTE functions, it makes it really obvious to investors that they are employees and that they've been tricked. FTEs often have loads of obligations that contractors don't, too. It's goes both ways.

        1 Reply Last reply Reply Quote 0
        • scottalanmillerS
          scottalanmiller @Dashrender
          last edited by

          @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

          So - is all this shit I'm hearing nothing but lies? or are the rules different in CA? or are they just a bad company (OK we already know they are a bad company, so don't dive to deep into that).

          None of that is true. What you are hearing isn't a lie, it's just the norm and absolutely expected from any company. CA does have different rules, but not in this case. They are a bad company, but this isn't related ๐Ÿ˜‰

          What they are doing totally makes sense for a public corporation and is how it is meant to be. Nothing wrong with it. NTG doesn't want to do that, because our staff are family, but a normal company where people come and go and it's just "a job", even a good job, this is a logical thing.

          In all your description you'll notice that you keep saying that they get "different" benefits. But you never say who gets the advantage. That's telling, and accurate. Because one isn't better or worse, just different. Life is all about variety and large companies have to do more dramatic things to allow for variety in who they hire. This is just one of those ways.

          DashrenderD 1 Reply Last reply Reply Quote 0
          • scottalanmillerS
            scottalanmiller
            last edited by

            So examples....

            When I worked for the big bank, I earned as a "consultant", who was still a legal FTE, but wasn't classified as an FTE to trick investors, I got no official vacation time, no medical leave, crappy health care, a standard 401K, and a salary that ranged from 50% - 300% over my counterparts. I earned more than my boss, and his boss.

            While I got no official vacation or work from home, unofficially I got almost unlimited work from home and when I asked for a two week vacation, they gave me two months. I never needed medical, but they would have kept paying me had anything happened. When my daughter was born, they sent me home... for a year! And when layoffs came around, the FTEs were on the chopping block, but we were not.

            As HR said outright "You only go from consultant to FTE when you aren't good enough to keep as a consultant, but not bad enough to fire." FTE was the lower role, by quite a bit.

            Now other places, that'll be reversed. The point is just that it's kinda random. The two might be equal, but different. They might be equal and the same. They might be wildly different, but in either direction.

            1 Reply Last reply Reply Quote 1
            • DashrenderD
              Dashrender @scottalanmiller
              last edited by

              @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

              @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

              So - is all this shit I'm hearing nothing but lies? or are the rules different in CA? or are they just a bad company (OK we already know they are a bad company, so don't dive to deep into that).

              None of that is true. What you are hearing isn't a lie, it's just the norm and absolutely expected from any company. CA does have different rules, but not in this case. They are a bad company, but this isn't related ๐Ÿ˜‰

              What they are doing totally makes sense for a public corporation and is how it is meant to be. Nothing wrong with it. NTG doesn't want to do that, because our staff are family, but a normal company where people come and go and it's just "a job", even a good job, this is a logical thing.

              In all your description you'll notice that you keep saying that they get "different" benefits. But you never say who gets the advantage. That's telling, and accurate. Because one isn't better or worse, just different. Life is all about variety and large companies have to do more dramatic things to allow for variety in who they hire. This is just one of those ways.

              I lack actual information to say/know if one way is better or not.
              For example of the contractors are earning more but get no vacation paid time off, then expectation could be like JBs recent post.... and that would be fair, in my mind.
              Of course the overheard conversations give an air of negativity as if the contractor is being screwed compared to the FTEs.

              scottalanmillerS 2 Replies Last reply Reply Quote 0
              • scottalanmillerS
                scottalanmiller @Dashrender
                last edited by

                @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                For example of the contractors are earning more but get no vacation paid time off, then expectation could be like JBs recent post.... and that would be fair, in my mind.

                Right, but you saw the part where I did get a vacation, right? None is guaranteed, but I actually got a bit.

                1 Reply Last reply Reply Quote 0
                • scottalanmillerS
                  scottalanmiller @Dashrender
                  last edited by

                  @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                  Of course the overheard conversations give an air of negativity as if the contractor is being screwed compared to the FTEs.

                  People always perceive themselves as getting screwed. The contractor feels screwed because they don't get the soft benefits. The FTE feels screwed because they don't earn the money. People aren't very objective and get emotional and always feel like the scorned party.

                  No one actually gets screwed, because in both cases people are negotiating what they get. You only really have a "getting screwed" situation when a union gets involved and peoples' values are no longer evaluated.

                  DashrenderD J 2 Replies Last reply Reply Quote 2
                  • DashrenderD
                    Dashrender @scottalanmiller
                    last edited by

                    @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                    @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                    Of course the overheard conversations give an air of negativity as if the contractor is being screwed compared to the FTEs.

                    People always perceive themselves as getting screwed. The contractor feels screwed because they don't get the soft benefits. The FTE feels screwed because they don't earn the money. People aren't very objective and get emotional and always feel like the scorned party.

                    No one actually gets screwed, because in both cases people are negotiating what they get. You only really have a "getting screwed" situation when a union gets involved and peoples' values are no longer evaluated.

                    Yeah without hard numbers on both sides, we simply canโ€™t know if it is equitable or not

                    scottalanmillerS 1 Reply Last reply Reply Quote 0
                    • scottalanmillerS
                      scottalanmiller @Dashrender
                      last edited by

                      @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                      Yeah without hard numbers on both sides, we simply canโ€™t know if it is equitable or not

                      There's no real way to know, even with hard numbers. Because you have to compare the pools, too. And how the benefits matter to them. For some people, for example, vacations or health care are worthless, so even a small amount of money offsets them completely. For others, they are worth more than you'd normally pay.

                      The important thing is, everyone negotiates for what their value is and what they can arrive at in the end determines what is equitable.

                      Remember when a new employ approaches or is approached by a company, they are not yet in one pool or the other. It's not like group X and group Y are pre-selected. It's equitable by nature because you can choose either pool.

                      When I was at the bank, I was offered FTE conversion, but it wouldn't have been as good for me. So I turned it down.

                      DashrenderD 1 Reply Last reply Reply Quote 0
                      • DashrenderD
                        Dashrender @scottalanmiller
                        last edited by

                        @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                        When I was at the bank, I was offered FTE conversion, but it wouldn't have been as good for me. So I turned it down.

                        At a 50% pay increase over the FTE, I can't ever see it being worthwhile. You're already talking a highly paid position (I'm assuming bottom of the barrel FTE is making $80K, that puts you at $120K min... you can pretty easily pay for vacation time (i.e. take non paid time off - if required) and healthcare and still likely still be earning more than the FTE.

                        scottalanmillerS 1 Reply Last reply Reply Quote 0
                        • scottalanmillerS
                          scottalanmiller @Dashrender
                          last edited by

                          @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                          @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                          When I was at the bank, I was offered FTE conversion, but it wouldn't have been as good for me. So I turned it down.

                          At a 50% pay increase over the FTE, I can't ever see it being worthwhile. You're already talking a highly paid position (I'm assuming bottom of the barrel FTE is making $80K, that puts you at $120K min... you can pretty easily pay for vacation time (i.e. take non paid time off - if required) and healthcare and still likely still be earning more than the FTE.

                          Exactly. Although their benefits were really good, they just didn't offset the pay differential. Some people liked it, but the increased risk of being FTE (all layoffs were of FTEs, not consultants) makes even a close situation totally not worth it.

                          DashrenderD 1 Reply Last reply Reply Quote 0
                          • DashrenderD
                            Dashrender @scottalanmiller
                            last edited by

                            @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                            @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                            @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                            When I was at the bank, I was offered FTE conversion, but it wouldn't have been as good for me. So I turned it down.

                            At a 50% pay increase over the FTE, I can't ever see it being worthwhile. You're already talking a highly paid position (I'm assuming bottom of the barrel FTE is making $80K, that puts you at $120K min... you can pretty easily pay for vacation time (i.e. take non paid time off - if required) and healthcare and still likely still be earning more than the FTE.

                            Exactly. Although their benefits were really good, they just didn't offset the pay differential. Some people liked it, but the increased risk of being FTE (all layoffs were of FTEs, not consultants) makes even a close situation totally not worth it.

                            This is the part that's completely counter intuitive. At least until you explain the reason they even have consultants is because of investors AND assumes the consultants find themselves in a position fairly equal to or better off than the FTEs.

                            And that's why the the everyman hates the idea of consulting - they expect to be the first ones put out to pasture.

                            scottalanmillerS 1 Reply Last reply Reply Quote 0
                            • scottalanmillerS
                              scottalanmiller @Dashrender
                              last edited by

                              @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                              And that's why the the everyman hates the idea of consulting - they expect to be the first ones put out to pasture.

                              And often it is. I wouldn't guess that what we had was the norm in all industries, but it is certainly common. Basically the "fodder" are stuck as FTEs and the elite that need special benefits, pay, and protection have to be kept away from the masses in some manner. In giant companies, seeing employees as expendable cogs is common and mass, blind layoffs are common. If you have people who are actually necessary (or highly critical) that you'd struggle to replace and losing them would disrupt the business or just be insanely costly to replace, you have to do something.

                              Basically, in a large company, the FTE pool is treated a lot like a union. And sometimes actually is a union. Unions mean that no one with any real value will consider working there. Unless you have a workaround. Consulting is the workaround to actual unions or just union-like employment pools. Giving people the power to negotiate based on their value, rather than just being a generic butt in a seat.

                              1 Reply Last reply Reply Quote 0
                              • DashrenderD
                                Dashrender
                                last edited by

                                So - if consultants aren't the first gone in layoffs - why are they paid so much more?

                                I mean you explained a bits:
                                FTE might equal better healtcare plan
                                FTE has paid vacation
                                FTE has paid holidays
                                FTE participates in company functions
                                401K
                                etc

                                So as a consultant you'd want the company to make up for these things, and that's generally done with a higher wage... but you said 50%-300% more - holy crap - WHY?

                                Does part of the answer come from the fact that the super high paid employees they don't want on the payroll books because that affects top compensation vs bottom for federal reporting? So it's better to keep those high earners off payroll and on operational costs? (seems like a loophole)

                                IRJI scottalanmillerS 3 Replies Last reply Reply Quote 0
                                • IRJI
                                  IRJ @Dashrender
                                  last edited by

                                  @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                                  So - if consultants aren't the first gone in layoffs - why are they paid so much more?

                                  I mean you explained a bits:
                                  FTE might equal better healtcare plan
                                  FTE has paid vacation
                                  FTE has paid holidays
                                  FTE participates in company functions
                                  401K
                                  etc

                                  So as a consultant you'd want the company to make up for these things, and that's generally done with a higher wage... but you said 50%-300% more - holy crap - WHY?

                                  Does part of the answer come from the fact that the super high paid employees they don't want on the payroll books because that affects top compensation vs bottom for federal reporting? So it's better to keep those high earners off payroll and on operational costs? (seems like a loophole)

                                  You budget consultants based off projects which means you can pay them substantially more.

                                  1 Reply Last reply Reply Quote 0
                                  • scottalanmillerS
                                    scottalanmiller @Dashrender
                                    last edited by

                                    @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                                    So - if consultants aren't the first gone in layoffs - why are they paid so much more?

                                    Because they are the senior people. The ones that you couldn't hire at FTE rates, because they aren't fodder.

                                    In small shops, this problem doesn't happen. Every new hire is a unique situation. But in a normal F500, the FTE pool is effectively a loose union with pay caps, strict vacation and benefit rules, etc.

                                    Hiring a consultant means you can pay beyond the FTE cap, you can negotiate any terms that make them happy... such as...

                                    • Higher Pay
                                    • Foreign Pay
                                    • 1099 Options (sometimes)
                                    • Corp to Corp
                                    • Any vacation they want
                                    • Work from home
                                    • Allowed to moonlight / side gig
                                    • Whatever health benefits they want (including none)
                                    • Guaranteed holidays or times
                                    1 Reply Last reply Reply Quote 0
                                    • scottalanmillerS
                                      scottalanmiller @Dashrender
                                      last edited by

                                      @Dashrender said in W2, the IRS Test, and Who Do I Work For?:

                                      Does part of the answer come from the fact that the super high paid employees they don't want on the payroll books because that affects top compensation vs bottom for federal reporting? So it's better to keep those high earners off payroll and on operational costs? (seems like a loophole)

                                      Correct. This is the basic reason. They don't want their salary reported to FTEs, they don't want people able to compare, they don't want stock holders seeing the numbers, etc. But NOT for Federal Reporting, Fed reporting can't change because they are all employees just the same. It's SHAREHOLDER reporting.

                                      So it IS a loophole, but not a loophole to the feds or IRS, they know exactly what is going on. It's a loophole to idiot investors who are attempting to sabotage their own investments by trying to manage something without knowing what they are doing.

                                      1 Reply Last reply Reply Quote 0
                                      • scottalanmillerS
                                        scottalanmiller
                                        last edited by

                                        The bottom line isn't that consultants are better, worse, or anything in particular. They exist because companies need exceptions from the normal process. Maybe this is because a consultant is temporary, maybe because they are more permanent, maybe because they need to be paid more, maybe because they need to be paid less, maybe they just need a more flexible work arrangement. Whatever the case, the one universal factor is that consultant positions in any company are there to not be part of the general employment pool with the general employment rules and reporting.

                                        Every company uses these differently. But nearly every large business needs them. And many small ones.

                                        1 Reply Last reply Reply Quote 0
                                        • scottalanmillerS
                                          scottalanmiller
                                          last edited by

                                          Now, when it is used badly is when companies treat FTEs well, and consultants poorly, and advertise how great of a place they are to work at and use it to make employment there look better than it is. This is sadly common and part of the giant scam that American employment often is. No transparency and nearly everything is a lie.

                                          In the real world, though, places that I have worked haven't done that and if anything it is the opposite. They make themselves look like much worse places because their FTE pool reports lower pay and less stability than the average actually is.

                                          DashrenderD 1 Reply Last reply Reply Quote 0
                                          • DashrenderD
                                            Dashrender @scottalanmiller
                                            last edited by

                                            @scottalanmiller said in W2, the IRS Test, and Who Do I Work For?:

                                            Now, when it is used badly is when companies treat FTEs well, and consultants poorly, and advertise how great of a place they are to work at and use it to make employment there look better than it is. This is sadly common and part of the giant scam that American employment often is. No transparency and nearly everything is a lie.

                                            Apparently that is what Google does - at least according to the few things I've heard. They hire tons of consultants so they can treat them badly - low pay, low benefits, etc.

                                            scottalanmillerS 1 Reply Last reply Reply Quote 0
                                            • 1
                                            • 2
                                            • 1 / 2
                                            • First post
                                              Last post