3 ms·

If you give too many benefits to contractors, they become de-facto full time employees, and you have to pay for benefits and health insurance and all that stuff

If you give too many benefits to contractors, they become de-facto full time employees, and you have to pay for benefits and health insurance and all that stuff. That happened back in the day with engineers at Google also. They hired a lot of contractors, but you could really only work 6 months out of the year, or else they'd have to classify you as full time with all the attendant benefits. The food and fitness center costs are really a rounding error. Contractors also have to pay to use the shuttle, because again with the benefits/full-time or contractor designation.

tptacek 9y ago
I've been a full-time consultant/contractor since 2005 and felt like I was pretty familiar with the IRS classification rules, and this is new to me. Can you cite where you read this?
- jimmywanger 9y ago
  Sure. If you take a look at https://www.irs.gov/pub/irs-utl/x-26-07.pdf https://www.irs.gov/pub/irs-utl/x-26-07.pdf, points 6, 13 and 14 are the most important. If you give too many benefits to contractors, they could make a plausible case that they're full time employees and will be able to sue for back pay, benefits, and punitive damages. For instance, for point 13, you could argue that a free shuttle would be paying for your travel expenses. It's definitely a gray area, but large companies have very deep pockets and a very public lawsuit would harm them in ways that would not harm a startup without much money, and policies get made. Google I think is erring on the side of caution, hence selective caps on benefits and employment duration. "He only works for us 50% of the time, there is no way he's an employee." EDIT: And free shuttles could also run afoul of point 9 and point 7, which is doing work on the employer's premises and an expectation of certain hours to be kept. A case could be made that if you're providing transportation to a location, and it's only available for a few hours, there's a certain expectation that you're expected to be in a certain place at a certain time.
  - tptacek 9y ago
    I'm familiar with this list but unfamiliar with the mapping you're making to contractors getting access to facilities and amenities. The specific items you're pointing out apply far more to the normal course of the work contractors do than they do to cafeteria access. I'm going to push a little further back on this point, because the contractors we're talking about don't work for Facebook. They work for body shop firms, at arms length remove from Facebook. Another problem I'm having with this logic is that I've done long-term staff aug gigs for companies, direct 1099, and been given access to facilities and amenities.
    - jimmywanger 9y ago
      I think we're talking at cross purposes here. Microsoft got burned badly in a comment on this thread, because some contractors effectively wanted to upgrade their contractual status after working there for a while. That led them to update their HR policies to make sure there was no such confusion. For what it's worth, I am pretty sure that Google still provides cafeteria access for food to the cafeteria work, obviously after service hours. Another thing to bear in mind is that this is an HR policy for Facebook (I can't speak to Facebook and the actual policy). They don't really have to make sense, HR policies are there to shield the company from any possible liability and/or the possibility of the body shop's company getting their contract terminated. The spectre of the Microsoft lawsuit is probably likely to forbid certain practices for contractors, direct or through a hiring agency. Also, for most restaurants, you're not allowed to take food home from the serving line after your shift. If you can take food home from the serving line, that (in the company's perspective) tends to create a perverse incentive for making more food and driving up supply costs for no benefit to the company. There are many different perspectives for different companies. Simply saying that you've not encountered anything like this is not an indicative of general industry practices. Also, you were contracting directly with the company. You were probably paid better than the food service workers. If you're making under 20 an hour, the incentives for you to sue are far greater than if you were extremely well paid and should not rock the boat. Finally, if you're spending all your time onsite working for just one employer for extended hours and periods of times, even if you have a contracting company between you and the company, if you do it for long enough and get enough benefits, you can claim that you were actually an employee of the parent company. Sort of like a common law wife. It makes sense that you would want to put up an even higher wall between you and third party contractors.
nbclark 9y ago
I was at Microsoft years ago and there was a transition away from providing similar perks to contractors due to a lawsuit. https://www.reuters.com/article/businesspropicks-us-findlaw-dont-treat-c-idUSTRE53063S20090401 https://www.reuters.com/article/businesspropicks-us-findlaw-...
- tptacek 9y ago
  Microsoft got burned badly on misclassification, but amenities had nothing to do with it: their contractors effectively were employees, with no material difference between FTEs and contractors in terms of how was work delivered and what expectations were. (I've done a very little bit of contracting work for MSFT, FWIW). I'm not surprised if MSFT overcorrected after that shitstorm. But for what it's worth, my understanding is that v-badges at MSFT still get access to facilities!
  - patio11 9y ago
    For more background on this (dating back to the halycon years of 1986), see 'grellas's comment here: https://news.ycombinator.com/item?id=1137930 https://news.ycombinator.com/item?id=1137930 Though the notion that an IRS reclassification caused an employment practices lawsuit demanding access to e.g. retirement benefits for a reclassified independent contractor is a bit amusing, if terrifying when considered from an employer's perspective.

tptacek 9y ago

I've been a full-time consultant/contractor since 2005 and felt like I was pretty familiar with the IRS classification rules, and this is new to me. Can you cite where you read this?

jimmywanger 9y ago
Sure. If you take a look at https://www.irs.gov/pub/irs-utl/x-26-07.pdf https://www.irs.gov/pub/irs-utl/x-26-07.pdf, points 6, 13 and 14 are the most important. If you give too many benefits to contractors, they could make a plausible case that they're full time employees and will be able to sue for back pay, benefits, and punitive damages. For instance, for point 13, you could argue that a free shuttle would be paying for your travel expenses. It's definitely a gray area, but large companies have very deep pockets and a very public lawsuit would harm them in ways that would not harm a startup without much money, and policies get made. Google I think is erring on the side of caution, hence selective caps on benefits and employment duration. "He only works for us 50% of the time, there is no way he's an employee." EDIT: And free shuttles could also run afoul of point 9 and point 7, which is doing work on the employer's premises and an expectation of certain hours to be kept. A case could be made that if you're providing transportation to a location, and it's only available for a few hours, there's a certain expectation that you're expected to be in a certain place at a certain time.
- tptacek 9y ago
  I'm familiar with this list but unfamiliar with the mapping you're making to contractors getting access to facilities and amenities. The specific items you're pointing out apply far more to the normal course of the work contractors do than they do to cafeteria access. I'm going to push a little further back on this point, because the contractors we're talking about don't work for Facebook. They work for body shop firms, at arms length remove from Facebook. Another problem I'm having with this logic is that I've done long-term staff aug gigs for companies, direct 1099, and been given access to facilities and amenities.
  - jimmywanger 9y ago
    I think we're talking at cross purposes here. Microsoft got burned badly in a comment on this thread, because some contractors effectively wanted to upgrade their contractual status after working there for a while. That led them to update their HR policies to make sure there was no such confusion. For what it's worth, I am pretty sure that Google still provides cafeteria access for food to the cafeteria work, obviously after service hours. Another thing to bear in mind is that this is an HR policy for Facebook (I can't speak to Facebook and the actual policy). They don't really have to make sense, HR policies are there to shield the company from any possible liability and/or the possibility of the body shop's company getting their contract terminated. The spectre of the Microsoft lawsuit is probably likely to forbid certain practices for contractors, direct or through a hiring agency. Also, for most restaurants, you're not allowed to take food home from the serving line after your shift. If you can take food home from the serving line, that (in the company's perspective) tends to create a perverse incentive for making more food and driving up supply costs for no benefit to the company. There are many different perspectives for different companies. Simply saying that you've not encountered anything like this is not an indicative of general industry practices. Also, you were contracting directly with the company. You were probably paid better than the food service workers. If you're making under 20 an hour, the incentives for you to sue are far greater than if you were extremely well paid and should not rock the boat. Finally, if you're spending all your time onsite working for just one employer for extended hours and periods of times, even if you have a contracting company between you and the company, if you do it for long enough and get enough benefits, you can claim that you were actually an employee of the parent company. Sort of like a common law wife. It makes sense that you would want to put up an even higher wall between you and third party contractors.

nbclark 9y ago

I was at Microsoft years ago and there was a transition away from providing similar perks to contractors due to a lawsuit. https://www.reuters.com/article/businesspropicks-us-findlaw-dont-treat-c-idUSTRE53063S20090401 https://www.reuters.com/article/businesspropicks-us-findlaw-...

tptacek 9y ago
Microsoft got burned badly on misclassification, but amenities had nothing to do with it: their contractors effectively were employees, with no material difference between FTEs and contractors in terms of how was work delivered and what expectations were. (I've done a very little bit of contracting work for MSFT, FWIW). I'm not surprised if MSFT overcorrected after that shitstorm. But for what it's worth, my understanding is that v-badges at MSFT still get access to facilities!
- patio11 9y ago
  For more background on this (dating back to the halycon years of 1986), see 'grellas's comment here: https://news.ycombinator.com/item?id=1137930 https://news.ycombinator.com/item?id=1137930 Though the notion that an IRS reclassification caused an employment practices lawsuit demanding access to e.g. retirement benefits for a reclassified independent contractor is a bit amusing, if terrifying when considered from an employer's perspective.