15 ms·

Having owned a 20+ person services business I can tell you that the paperwork/taxes/regulations around employees was frustrating. Yes, you can outsource this st

Having owned a 20+ person services business I can tell you that the paperwork/taxes/regulations around employees was frustrating. Yes, you can outsource this stuff, but why make it so complicated? Added to that, it was a virtual company with employees in 10+ states, it was a nightmare. It's comparatively much easier to just pay a contractor a higher hourly rate and let them pick their own health care, retirement, time off policy, etc.

nostromo 8y ago
Employees are both a pain and a liability, and few people in government are even aware of the problem. When I was an employer as a small business, my heart would skip a beat every time I received a letter from the many local, state or federal agencies that would chime in on some requirement as an employer. For someone that wants to do it right, it's very hard to know exactly what "right" is without paying an arm and leg for professional services. Each letter was a reminder about how easy it would be to outsource each position to another company or country.
- dboreham 8y ago
  >When I was an employer as a small business, my heart would skip a beat every time I received a letter from the many local, state or federal agencies that would chime in on some requirement as an employer. For someone that wants to do it right, it's very hard to know exactly what "right" is without paying an arm and leg for professional services. Hmm. Wondering what country you are in. I'm in the USA and for "reasons.." I ended up performing all the admin tasks relating to employees (payroll, witholding, IRA, unemployment, insurance) over the past 6 months. I had to learn everything from scratch. Yes it was quite a bit of work, but I don't have the same experience you report at all. I haven't received any letters other than helpful reminders of things I need to file. Yes we have an accounting firm who have over the years educated us on what we need to do, forms to file, and so on. But nothing much changes year-to-year so once you're running the cognitive load is not too bad. None of it scares me at all. Certainly nothing in comparison to running the actual business, where you have customers who don't pay you; risk of being sued; requirement to use Node.JS -- you know -- real scary stuff ;)
  - everdev 8y ago
    Wait until year 2 or 3, governments are slow. I've had countless accusations of unfiled paperwork and numerous refilings. If 1 thing is off it seems like it takes atleast 6 months to correct it. I also seem to get a fake workers comp claim or two per year that needs to be sorted out. By the time your correction is filed, another notice had already been sent out. So, you need to refile again to be sure then they call asking why you refiled twice. It's a pain. Also, if you have an employee that owes alimony or child support it's another hassle that the employer gets sucked into.
    - dboreham 8y ago
      We've been in business for 17 years.
  - born2web 8y ago
    As a small software agency owner based in the USA, i too experience the same dread as everdev... perpetual fear that i am failing to comply with some arcane rule/law especially at the city and state govt levels...
- Johnny555 8y ago
  Employees are both a pain and a liability Aren't they an asset too? A contractor doesn't really care about the long term health of your company, if your company folds, he'll go down the street and work for a competitor. He knows that you'll dump him in an instant if you want to so he has no incentive to go the extra-mile for your company. I can see outsourcing peripheral tasks, office cleaning, etc, but for any important part of the business, outsourcing seems like a gamble. (somewhat related, I helped in-source a project that had spent 2 years outsourced off-shore which had met few of its deliverables. In 6 months the new local team got it back on track with literally 1/5th the headcount the outsourced agency used which made it cheaper to bring it back in house) Granted if you're hiring minimum wage workers, maybe it's hard to find quality employees, but for any non-trivial position, outsourcing to contract workers seems like a short-sighted move.
  - magnetic 8y ago
    > Aren't they an asset too? A contractor doesn't really care about the long term health of your company, if your company folds, he'll go down the street and work for a competitor. Is this any different with an employee?
    - jasonlotito 8y ago
      Yes.
    - white-flame 8y ago
      No. Unless there's a non-compete clause, which is yet another problem.
  - logfromblammo 8y ago
    > ...he'll go down the street and work for a competitor. He knows that you'll dump him in an instant if you want to so he has no incentive to go the extra-mile for your company.... Exactly how I feel as an "at will" employee. At least the contractor has... whaddyacallit... a contract. I really have no incentive link to the company I work for beyond ensuring that they'll continue to have enough paid tasks to offer me for as long as I want to take them. Even if the company announced some sort of profit-sharing or bonuses, there's no reason for me to believe that I'd be able to collect. As far as I can tell, the only reason companies around here have employees at all is so they can credibly attach their resumes to bids and proposals.
vkou 8y ago
It's comparatively much easier for you. It's also comparatively easier for me to just throw my trash out the window, instead of taking it to the community dumpster. [1] What it does, is it creates more busywork work for society, as a whole. Instead of a few HR persons/systems/payroll experts, in a no-employee world, everyone now needs to become at least somewhat competent at dealing with all this rubbish. There's a reason we don't churn butter by hand anymore - dedicated creameries are much better, faster, and cheaper at it then I'll ever be. [1] I'm not saying that you're a bad person, or that having your employees do their own paperwork is like throwing trash on the street - I am only making this analogy because of the amount of busywork that doing your own taxes/payroll/compliance entails. Busywork that most of them are not experts in.
- TomMarius 8y ago
  > It's comparatively much easier for you. No, it isn't. It's way harder to deal with each employee than it is for the person to deal with their stuff as a contractor.
  - vkou 8y ago
    Maybe if you were contracting for someone, while knowing what you know about all those systems. If I were a contractor, I wouldn't know where to start. I'd need to spend hours figuring the law out, figuring out which forms need to be filled and when, how to deal with weird one-off edge cases. Multiply that by the number of employees that you have, and there's the social cost that decentralizing this inflicts. Because this is a process I'd do once a year (Or four times a year as a contractor?), I wouldn't remember what the hell I did last year, what software I was using, where I found the forms in question (Maybe they moved, maybe the government changed the rules, maybe the website that I learned all I know from is dead/out-of-date), etc. A company's HR department/accountant does this all the time. This is their core competency. This is not my core competency. This is the same thing as with self-checkout lines at the grocery. I've yet to see a single customer be half as efficient at scanning and bagging groceries as the clerks. Yet, it's cheaper for the store, because their customers' shopping time is 'free'. [1] What changes when I'm on paternity leave? Unpaid time off due to sickness? This is something that most people do once, maybe twice in their lives. This is something that most HR people, working for businesses deal with all the time.
maxxxxx 8y ago
I totally agree that employment should be made easier. For example things like health care and 401k should be handled by the employee instead of the employer. It would also be nice if there were pension funds that are open to everyone instead of just employees of one company or government. But the trend to just relieve employers of the "burden" without giving more power to the employee is wrong too. For example each state or the whole country should be one risk pool where everyone can buy in. Same for 401k, disability and others. A lot of tax deductions should be moved from employer to employee. We have to be really careful not to end up with a market where employers have all the power and the rest are just day laborers without any rights.
- ng12 8y ago
  I wonder about healthcare a lot. It seems to me the people who actually have the ability to vote with their wallet invariably get good health insurance through their employer. Surely this must do something to inflate prices.
  - erentz 8y ago
    I think views on healthcare would change rapidly if employers were prohibited from providing it as a benefit and all people had to get it privately. Even if employers raised salaries in accordance the shock people would have seeing the full cost of insurance would stir discontent. The answer as others have pointed out is obvious. Medicare for All is something every business owner should support to simplify their own lives. (Ignoring that it’s just good business decision for “USA, Inc.” since it’ll save the country money.)
    - ghaff 8y ago
      >people would have seeing the full cost of insurance would stir discontent I'm not sure. Maybe health insurance tends to be fully paid for by many Bay Area companies, but the overall trend seems to be for it to be much more of a split between employer and employee. It's still often a significant benefit but the employee-paid share is still significant enough that most people make deliberate decisions among available plans.
stefan_ 8y ago
Well except you need to pay the contractor twice the money because now they need to spend time and a lot of money on experts to just file their taxes correctly. This scales a lot better for employer/employees, not for any particular reason but that the system was "designed" for it if you can call it that.
- saas_sam 8y ago
  Money is cheaper than time and risk.
- asah 8y ago
  it's not double, esp fully loaded incl benefits, payroll taxes, career development & performance mgmt, time off for vacation/illness/childcare, etc.
- everdev 8y ago
  For contractors, taxes aren't too bad to do by yourself. Your income is sent to you on a 1099 and then deduct your expenses. The estimated taxes are silly though.
BadassFractal 8y ago
Even better, replace all humans with SaaS products and automation, at least as far as knowledge work goes. No morale issues, no HR violations, no hiring, no diversity quotas, no standup or sync meetings, no one-on-ones, no wanting a promotion, works 24/7 with no sick days or vacation time, no rivalry within the team, no need for office space, catered lunch, benefits, work visas etc. The upside is hard to overstate. As an employer, I will do everything in my power to switch human roles to software and will never look back.
- ghaff 8y ago
  To some degree you still need some people, albeit far fewer of them, to manage and, perhaps, customize those services. But, yes, as a general principle, it makes a lot of sense to outsource largely undifferentiated tasks like payroll, travel, payroll, etc. to whatever combination of software and specialist companies it makes sense to do so. It's possible to overdo it but for non-core functions it absolutely makes sense to start by asking why it can't be done with some combination of off-the-shelf software and outsourced services.
- JDWolf 8y ago
  and what prevents you from becoming another SaaS (or whatever-you-do-aaS to your customers as much as it can be service-tized?
  - BadassFractal 8y ago
    Nothing, that's part of the race, and the goal of every company to figure out. Most products eventually get replaced by something else, that's just the nature of technology business.
tw1010 8y ago
So dealing with paperwork is a pain both for the employer as well as the contractor. Rather than paperwork shifting away from the hands of the company, which you seem to be in favour of, wouldn't a more likely future scenario be that some kind of paperwork-middleman will spring into place? Like, someone that deals with the paperwork (who somehow require minimal paperwork themselves) for a minimal fee so neither the company has to deal with it nor the contractor?
- fizx 8y ago
  > some kind of paperwork-middleman will spring into place This is called a "PEO".
fizx 8y ago
Alternately, you could use a PEO! (i.e. completely outsourced HR services, such that your employees are actually employed by the HR's shell company) You get the management ease of contractors; they get the benefits of employment. It seems to work, but I'm curious if there are non-obvious downsides.
- gaius 8y ago
  Do these “benefits of employment” include actual benefits, as most employees understand the term?
  - fizx 8y ago
    Last time I had a PEO employ me, I had at least healthcare and 401k matching.
pavlov 8y ago
Paperwork and regulations around employment have grown so complicated because poorly performing businesses historically tend to try to rip off their employees first. It's simply much easier for the unscrupulous (or desperate) small business owner to squeeze margins up by abusing their employees rather than doing something that could improve their competitive position.
asah 8y ago
this! Individually, each regulation is well intended but the sum has made W-2 employment into a deep burden outside of "core" roles that define the company. Compound this with very different career & workplace needs by different job function, and you have a recipe for contractors and outsourcing. one thing that can help are PEOs like TriNet, who handle the multi-state and international paperwork, among other things. I've used Trinet for 20 years and numerous companies - frustrating at times, but way better than DIY.
tomphoolery 8y ago
It's also comparatively much easier to _fire_ a contractor than an employee. With employees you need to pay for their unemployment, give them severance, deal with COBRA, etc. Contractors' lives can be ruined in a moment's notice. That's why I'm not a contractor, and never will be. I see how the tech industry treats people it doesn't like, and I'd like to know that I at least have _some_ protection against that.
- MatthewMcDonald 8y ago
  Part of the reason that contractors have a higher hourly rate is to account for the time between contracts.
  - geezerjay 8y ago
    > Part of the reason that contractors have a higher hourly rate is to account for the time between contracts. Actually they don't. Some contractors are able to negotiate higher hourly rates, just like some employees are able to negotiate higher salaries. Yet, just because some employees managed to get paid above average salaries that doesn't mean all employees earn above average salaries.
    - bena 8y ago
      I've seen both and I don't think it comes down to negotiation, I think it comes down to contract type. I've worked as a contractor for a firm. We billed out pretty high. I also know some people who work for a certain company as "contractors" but just seems like a way for the company to avoid giving benefits. A shitty hourly wage and they "furlough" everybody for a few months out of the year so they don't really have to worry about actually firing anybody, just don't pick up their contract next year.
    - MatthewMcDonald 8y ago
      Perhaps I should have clarified; part of the reason that contractors can negotiate higher rates is because businesses are willing to pay more if they can avoid a long term commitment like keeping a person on as an employee. If you are a contractor, then you are running a business and you will have to do things that an employee wouldn't. One of those things is negotiating enough to cover the time between contracts. If you aren't good at negotiating then your business will not do as well.
jlarocco 8y ago
That could be a double edged sword for employers, though. If regular employees start becoming contractors on a large scale then I'd like (and expect) to see some kind of unions or employment agencies springing up to handle the paperwork for the (former) employees and use collective bargaining to get better wages, group insurance, etc.
- gaius 8y ago
  Yes, like a medieval guild. That would work very well in tech where the apprentice/journeyman/master levels are still very applicable
dboreham 8y ago
>It's comparatively much easier to just pay a contractor a higher hourly rate Is this an actual option though? I've heard this notion a few times on HN that you can simply "1099" people and all is well. Admittedly not my core competency but I have been told numerous times by experts that you can't do that because the IRS and state labor dept will make their own determination as to whether your staff are employees. They may disagree with your thinking. e.g. https://www.dol.gov/whd/workers/misclassification/ https://www.dol.gov/whd/workers/misclassification/
- TylerE 8y ago
  It's very commonly done. Most "employees" don't know enough to complain/report it.
- exclusiv 8y ago
  You can but they're cracking down on it and fines are steep. California recently passed a really unfriendly and strict law because delivery type businesses abused the 1099 option [1]. Now if you run a service based business (say app development) but outsource/1099 something like design but you are building an app - does graphic design fall under the B test ("that the worker performs work that is outside the usual course of the hiring entity’s business")? Is design outside of your usual course of business? Or does it count because your app needs design? It's really a grey area but you can see how that B rule is really open to interpretation. We've had labor law litigators tell us to basically stop doing 1099 at all. I started doing part time hourly instead for new hires. And hiring people that live outside California including other countries. I don't think this will work out well for most people - they'll get part time work or hourly with limited benefits and many will be pushed to work for a staffing firm. [1] https://www.wagehourblog.com/2018/04/articles/california-wage-hour-law/california-supreme-court-adopts-abc-test-for-independent-contractors/ https://www.wagehourblog.com/2018/04/articles/california-wag...
nine_k 8y ago
One thing that's harder for a contractor is that the insurance rates are noticeably higher if you buy a policy as a private person. Large companies can usually negotiate a bit nicer terms form insurers for a collective policy. I can imagine that schemes exist, or will crop up, for this benefit to be passed to the contractor, as a part of compensation package which is also less expense to the "employer". E.g. doing contracting work via a shell company that only exists to hire contractors who already got a bit of contract work, and provide them the benefits of scale for a cut of them.
bwb 8y ago
I don't understand, why were you not using a PEO or service that handles all that? I've used PEOs and love them, they handle everything and hook in with good 401k programs, health insurance, and more.

nostromo 8y ago

Employees are both a pain and a liability, and few people in government are even aware of the problem. When I was an employer as a small business, my heart would skip a beat every time I received a letter from the many local, state or federal agencies that would chime in on some requirement as an employer. For someone that wants to do it right, it's very hard to know exactly what "right" is without paying an arm and leg for professional services. Each letter was a reminder about how easy it would be to outsource each position to another company or country.

dboreham 8y ago
>When I was an employer as a small business, my heart would skip a beat every time I received a letter from the many local, state or federal agencies that would chime in on some requirement as an employer. For someone that wants to do it right, it's very hard to know exactly what "right" is without paying an arm and leg for professional services. Hmm. Wondering what country you are in. I'm in the USA and for "reasons.." I ended up performing all the admin tasks relating to employees (payroll, witholding, IRA, unemployment, insurance) over the past 6 months. I had to learn everything from scratch. Yes it was quite a bit of work, but I don't have the same experience you report at all. I haven't received any letters other than helpful reminders of things I need to file. Yes we have an accounting firm who have over the years educated us on what we need to do, forms to file, and so on. But nothing much changes year-to-year so once you're running the cognitive load is not too bad. None of it scares me at all. Certainly nothing in comparison to running the actual business, where you have customers who don't pay you; risk of being sued; requirement to use Node.JS -- you know -- real scary stuff ;)
- everdev 8y ago
  Wait until year 2 or 3, governments are slow. I've had countless accusations of unfiled paperwork and numerous refilings. If 1 thing is off it seems like it takes atleast 6 months to correct it. I also seem to get a fake workers comp claim or two per year that needs to be sorted out. By the time your correction is filed, another notice had already been sent out. So, you need to refile again to be sure then they call asking why you refiled twice. It's a pain. Also, if you have an employee that owes alimony or child support it's another hassle that the employer gets sucked into.
  - dboreham 8y ago
    We've been in business for 17 years.
- born2web 8y ago
  As a small software agency owner based in the USA, i too experience the same dread as everdev... perpetual fear that i am failing to comply with some arcane rule/law especially at the city and state govt levels...
Johnny555 8y ago
Employees are both a pain and a liability Aren't they an asset too? A contractor doesn't really care about the long term health of your company, if your company folds, he'll go down the street and work for a competitor. He knows that you'll dump him in an instant if you want to so he has no incentive to go the extra-mile for your company. I can see outsourcing peripheral tasks, office cleaning, etc, but for any important part of the business, outsourcing seems like a gamble. (somewhat related, I helped in-source a project that had spent 2 years outsourced off-shore which had met few of its deliverables. In 6 months the new local team got it back on track with literally 1/5th the headcount the outsourced agency used which made it cheaper to bring it back in house) Granted if you're hiring minimum wage workers, maybe it's hard to find quality employees, but for any non-trivial position, outsourcing to contract workers seems like a short-sighted move.
- magnetic 8y ago
  > Aren't they an asset too? A contractor doesn't really care about the long term health of your company, if your company folds, he'll go down the street and work for a competitor. Is this any different with an employee?
  - jasonlotito 8y ago
    Yes.
  - white-flame 8y ago
    No. Unless there's a non-compete clause, which is yet another problem.
- logfromblammo 8y ago
  > ...he'll go down the street and work for a competitor. He knows that you'll dump him in an instant if you want to so he has no incentive to go the extra-mile for your company.... Exactly how I feel as an "at will" employee. At least the contractor has... whaddyacallit... a contract. I really have no incentive link to the company I work for beyond ensuring that they'll continue to have enough paid tasks to offer me for as long as I want to take them. Even if the company announced some sort of profit-sharing or bonuses, there's no reason for me to believe that I'd be able to collect. As far as I can tell, the only reason companies around here have employees at all is so they can credibly attach their resumes to bids and proposals.

vkou 8y ago

It's comparatively much easier for you. It's also comparatively easier for me to just throw my trash out the window, instead of taking it to the community dumpster. [1] What it does, is it creates more busywork work for society, as a whole. Instead of a few HR persons/systems/payroll experts, in a no-employee world, everyone now needs to become at least somewhat competent at dealing with all this rubbish. There's a reason we don't churn butter by hand anymore - dedicated creameries are much better, faster, and cheaper at it then I'll ever be. [1] I'm not saying that you're a bad person, or that having your employees do their own paperwork is like throwing trash on the street - I am only making this analogy because of the amount of busywork that doing your own taxes/payroll/compliance entails. Busywork that most of them are not experts in.

TomMarius 8y ago
> It's comparatively much easier for you. No, it isn't. It's way harder to deal with each employee than it is for the person to deal with their stuff as a contractor.
- vkou 8y ago
  Maybe if you were contracting for someone, while knowing what you know about all those systems. If I were a contractor, I wouldn't know where to start. I'd need to spend hours figuring the law out, figuring out which forms need to be filled and when, how to deal with weird one-off edge cases. Multiply that by the number of employees that you have, and there's the social cost that decentralizing this inflicts. Because this is a process I'd do once a year (Or four times a year as a contractor?), I wouldn't remember what the hell I did last year, what software I was using, where I found the forms in question (Maybe they moved, maybe the government changed the rules, maybe the website that I learned all I know from is dead/out-of-date), etc. A company's HR department/accountant does this all the time. This is their core competency. This is not my core competency. This is the same thing as with self-checkout lines at the grocery. I've yet to see a single customer be half as efficient at scanning and bagging groceries as the clerks. Yet, it's cheaper for the store, because their customers' shopping time is 'free'. [1] What changes when I'm on paternity leave? Unpaid time off due to sickness? This is something that most people do once, maybe twice in their lives. This is something that most HR people, working for businesses deal with all the time.

maxxxxx 8y ago

I totally agree that employment should be made easier. For example things like health care and 401k should be handled by the employee instead of the employer. It would also be nice if there were pension funds that are open to everyone instead of just employees of one company or government. But the trend to just relieve employers of the "burden" without giving more power to the employee is wrong too. For example each state or the whole country should be one risk pool where everyone can buy in. Same for 401k, disability and others. A lot of tax deductions should be moved from employer to employee. We have to be really careful not to end up with a market where employers have all the power and the rest are just day laborers without any rights.

ng12 8y ago
I wonder about healthcare a lot. It seems to me the people who actually have the ability to vote with their wallet invariably get good health insurance through their employer. Surely this must do something to inflate prices.
- erentz 8y ago
  I think views on healthcare would change rapidly if employers were prohibited from providing it as a benefit and all people had to get it privately. Even if employers raised salaries in accordance the shock people would have seeing the full cost of insurance would stir discontent. The answer as others have pointed out is obvious. Medicare for All is something every business owner should support to simplify their own lives. (Ignoring that it’s just good business decision for “USA, Inc.” since it’ll save the country money.)
  - ghaff 8y ago
    >people would have seeing the full cost of insurance would stir discontent I'm not sure. Maybe health insurance tends to be fully paid for by many Bay Area companies, but the overall trend seems to be for it to be much more of a split between employer and employee. It's still often a significant benefit but the employee-paid share is still significant enough that most people make deliberate decisions among available plans.

stefan_ 8y ago

Well except you need to pay the contractor twice the money because now they need to spend time and a lot of money on experts to just file their taxes correctly. This scales a lot better for employer/employees, not for any particular reason but that the system was "designed" for it if you can call it that.

saas_sam 8y ago
Money is cheaper than time and risk.
asah 8y ago
it's not double, esp fully loaded incl benefits, payroll taxes, career development & performance mgmt, time off for vacation/illness/childcare, etc.
everdev 8y ago
For contractors, taxes aren't too bad to do by yourself. Your income is sent to you on a 1099 and then deduct your expenses. The estimated taxes are silly though.

BadassFractal 8y ago

Even better, replace all humans with SaaS products and automation, at least as far as knowledge work goes. No morale issues, no HR violations, no hiring, no diversity quotas, no standup or sync meetings, no one-on-ones, no wanting a promotion, works 24/7 with no sick days or vacation time, no rivalry within the team, no need for office space, catered lunch, benefits, work visas etc. The upside is hard to overstate. As an employer, I will do everything in my power to switch human roles to software and will never look back.

ghaff 8y ago
To some degree you still need some people, albeit far fewer of them, to manage and, perhaps, customize those services. But, yes, as a general principle, it makes a lot of sense to outsource largely undifferentiated tasks like payroll, travel, payroll, etc. to whatever combination of software and specialist companies it makes sense to do so. It's possible to overdo it but for non-core functions it absolutely makes sense to start by asking why it can't be done with some combination of off-the-shelf software and outsourced services.
JDWolf 8y ago
and what prevents you from becoming another SaaS (or whatever-you-do-aaS to your customers as much as it can be service-tized?
- BadassFractal 8y ago
  Nothing, that's part of the race, and the goal of every company to figure out. Most products eventually get replaced by something else, that's just the nature of technology business.

tw1010 8y ago

So dealing with paperwork is a pain both for the employer as well as the contractor. Rather than paperwork shifting away from the hands of the company, which you seem to be in favour of, wouldn't a more likely future scenario be that some kind of paperwork-middleman will spring into place? Like, someone that deals with the paperwork (who somehow require minimal paperwork themselves) for a minimal fee so neither the company has to deal with it nor the contractor?

fizx 8y ago
> some kind of paperwork-middleman will spring into place This is called a "PEO".

fizx 8y ago

Alternately, you could use a PEO! (i.e. completely outsourced HR services, such that your employees are actually employed by the HR's shell company) You get the management ease of contractors; they get the benefits of employment. It seems to work, but I'm curious if there are non-obvious downsides.

gaius 8y ago
Do these “benefits of employment” include actual benefits, as most employees understand the term?
- fizx 8y ago
  Last time I had a PEO employ me, I had at least healthcare and 401k matching.

pavlov 8y ago

Paperwork and regulations around employment have grown so complicated because poorly performing businesses historically tend to try to rip off their employees first. It's simply much easier for the unscrupulous (or desperate) small business owner to squeeze margins up by abusing their employees rather than doing something that could improve their competitive position.

asah 8y ago

this! Individually, each regulation is well intended but the sum has made W-2 employment into a deep burden outside of "core" roles that define the company. Compound this with very different career & workplace needs by different job function, and you have a recipe for contractors and outsourcing. one thing that can help are PEOs like TriNet, who handle the multi-state and international paperwork, among other things. I've used Trinet for 20 years and numerous companies - frustrating at times, but way better than DIY.

tomphoolery 8y ago

It's also comparatively much easier to _fire_ a contractor than an employee. With employees you need to pay for their unemployment, give them severance, deal with COBRA, etc. Contractors' lives can be ruined in a moment's notice. That's why I'm not a contractor, and never will be. I see how the tech industry treats people it doesn't like, and I'd like to know that I at least have _some_ protection against that.

MatthewMcDonald 8y ago
Part of the reason that contractors have a higher hourly rate is to account for the time between contracts.
- geezerjay 8y ago
  > Part of the reason that contractors have a higher hourly rate is to account for the time between contracts. Actually they don't. Some contractors are able to negotiate higher hourly rates, just like some employees are able to negotiate higher salaries. Yet, just because some employees managed to get paid above average salaries that doesn't mean all employees earn above average salaries.
  - bena 8y ago
    I've seen both and I don't think it comes down to negotiation, I think it comes down to contract type. I've worked as a contractor for a firm. We billed out pretty high. I also know some people who work for a certain company as "contractors" but just seems like a way for the company to avoid giving benefits. A shitty hourly wage and they "furlough" everybody for a few months out of the year so they don't really have to worry about actually firing anybody, just don't pick up their contract next year.
  - MatthewMcDonald 8y ago
    Perhaps I should have clarified; part of the reason that contractors can negotiate higher rates is because businesses are willing to pay more if they can avoid a long term commitment like keeping a person on as an employee. If you are a contractor, then you are running a business and you will have to do things that an employee wouldn't. One of those things is negotiating enough to cover the time between contracts. If you aren't good at negotiating then your business will not do as well.

jlarocco 8y ago

That could be a double edged sword for employers, though. If regular employees start becoming contractors on a large scale then I'd like (and expect) to see some kind of unions or employment agencies springing up to handle the paperwork for the (former) employees and use collective bargaining to get better wages, group insurance, etc.

gaius 8y ago
Yes, like a medieval guild. That would work very well in tech where the apprentice/journeyman/master levels are still very applicable

dboreham 8y ago

>It's comparatively much easier to just pay a contractor a higher hourly rate Is this an actual option though? I've heard this notion a few times on HN that you can simply "1099" people and all is well. Admittedly not my core competency but I have been told numerous times by experts that you can't do that because the IRS and state labor dept will make their own determination as to whether your staff are employees. They may disagree with your thinking. e.g. https://www.dol.gov/whd/workers/misclassification/ https://www.dol.gov/whd/workers/misclassification/

TylerE 8y ago
It's very commonly done. Most "employees" don't know enough to complain/report it.
exclusiv 8y ago
You can but they're cracking down on it and fines are steep. California recently passed a really unfriendly and strict law because delivery type businesses abused the 1099 option [1]. Now if you run a service based business (say app development) but outsource/1099 something like design but you are building an app - does graphic design fall under the B test ("that the worker performs work that is outside the usual course of the hiring entity’s business")? Is design outside of your usual course of business? Or does it count because your app needs design? It's really a grey area but you can see how that B rule is really open to interpretation. We've had labor law litigators tell us to basically stop doing 1099 at all. I started doing part time hourly instead for new hires. And hiring people that live outside California including other countries. I don't think this will work out well for most people - they'll get part time work or hourly with limited benefits and many will be pushed to work for a staffing firm. [1] https://www.wagehourblog.com/2018/04/articles/california-wage-hour-law/california-supreme-court-adopts-abc-test-for-independent-contractors/ https://www.wagehourblog.com/2018/04/articles/california-wag...

nine_k 8y ago

One thing that's harder for a contractor is that the insurance rates are noticeably higher if you buy a policy as a private person. Large companies can usually negotiate a bit nicer terms form insurers for a collective policy. I can imagine that schemes exist, or will crop up, for this benefit to be passed to the contractor, as a part of compensation package which is also less expense to the "employer". E.g. doing contracting work via a shell company that only exists to hire contractors who already got a bit of contract work, and provide them the benefits of scale for a cut of them.

bwb 8y ago

I don't understand, why were you not using a PEO or service that handles all that? I've used PEOs and love them, they handle everything and hook in with good 401k programs, health insurance, and more.