3 ms·

Microsoft losing that contractors case also had a lot of repercussions affecting legitimate contractors. In the early 1990s before Microsoft lost, I easily got

by jasode 8y ago

Microsoft losing that contractors case also had a lot of repercussions affecting legitimate contractors. In the early 1990s before Microsoft lost, I easily got direct-1099 contracting jobs at various companies. Afterwards, every company got scared and overcorrected away from 1099s. It didn't matter if you incorporated as "Joe's Programming Solutions Inc". They insisted you had to go through one of their "approved vendors" which was basically just a middleman company set up to hire you as a W-2 employee. That intermediate company would then contract you to the 1099-averse client. Microsoft's defeat was when all the "W-2 bodyshops" popped up. Instead of me earning $100 directly from a client, I had to find a W-2 shop to "hire" me as an employee and let them skim $30 from my hourly billing so I would only net $70/hour. It wasn't too happy about that but that's the closest I could get to being a freelancer. I really didn't want to be anyone's employee. I believe most contractors share my opinion that the overall effect of the court judgement against Microsoft was a net negative and it didn't improve work conditions for contractors. Instead, it just made it worse by enriching middlemen we never asked for. It's also a net negative for the client company because they pay a somewhat higher bill rate to the W-2 company because they provide the service of "legal cover" to protect against a Microsoft type of lawsuit or IRS reclassification. It's a textbook version of economic inefficiencies.

bsimpson 8y ago
In exchange for the $30 an hour, you get a meaningless phone call from someone who works there every couple months and access to a terrible health plan. My plan was literally "pay $100 per month to avoid the 2% Obamacare tax." It covered basically nothing, and the deductible was ridiculous. The only value "talent agencies" add is that you can start earning money immediately, instead of jumping through whatever hoops vendors need to jump through to be approved nowadays.
- protomyth 8y ago
  You got hooked up with someone bad, which is a shame. I had a great health plan as a contractor (through my agency) and they were great about finding fun jobs. I do know a lot of agents didn't tell folks what rate they were being billed out at (I suspect that $30/hour would mean you are not getting good value), but my pay was a % of the bill rate.
  - bsimpson 8y ago
    I actually negotiated my pay with the hiring manager. I have no idea what the agency was paid. I got the invitation directly from the large company I was consulting for. They explained to me that they didn't work directly with freelancers; they had processes in place to prevent TVCs from being retroactively deemed FTEs (and compensated for withheld benefits). Therefore, they put me in touch with an agency whose only function was to hire freelancers as W2 employees and rent them back out to the company. I don't recall exactly: I think the agency's only client was the firm I was consulting for. They might have had 1 or 2 more. The whole we-only-exist-because-bureaucracy was pretty transparent. Funny story: one of the TVC restrictions was that you could only be one for a year. (At the end of the year, you had to either convert to full-time or take 6 months off.) Partway through the year, my client decided they wanted to switch agencies. Thousands of us got an email that basically said "As of next week, you legally work for Other Agency. Your day-to-day work will be the same."
    - protomyth 8y ago
      Uhm.... that sounds really, really shady. If you do the negotiating then they've failed at 90% of their job, and I suspect you most certainly didn't get your full value.
      - bsimpson 8y ago
        They chose an inaccurate job title for me to justify my salary. Maybe I could have made more freelancing somewhere else, but I think I was at the top of what this role was willing to pay. I was making $100 per hour with a guaranteed 40 billable hours per week.
        protomyth 8y ago
        Well, I'm glad you got something decent out of it. I have a bit of a visceral reaction to bad actors in agencies since their actions had consequences. It was very informative at one place I worked where a ticked off employee released a spreadsheet with all of the hourly rates for all the consultants. I was rather amused to lean how many bad actor agencies there were (although gratified that I worked with the honest sort). It was a bit amazing to me that people were baffled that I didn't really want to look at the spreadsheet. I knew my rate, was pretty happy, and was a bit worried it would impact how I viewed others.
- Dylan16807 8y ago
  > In exchange for the $30 an hour, you get a meaningless phone call from someone who works there every couple months and access to a terrible health plan. And you no longer have to pay $9 of social security and medicare employer taxes, right?
  - delinka 8y ago
    You still pay that. And yes, it's wrapped up in that $30. Yes, someone is providing a 'service' for 30% of your billing, but you can't shop around to get better and/or less expensive service.
    - Dylan16807 8y ago
      > You still pay that. And yes, it's wrapped up in that $30. That's a confusing way of putting it. > Yes, someone is providing a 'service' for 30% of your billing And that's pretty misleading as a followup. You're paying them 30% to perform services and to pay that 9% tax for you. So you're effectively paying closer to 21% for their services. That's still a lot. But it's significantly less.
      - bsimpson 8y ago
        A quick search of Wikipedia says the employer's share of FICA is 7.65% of the employee's gross wages: https://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax#Regularly_employed_people https://en.wikipedia.org/wiki/Federal_Insurance_Contribution...

by jasode 8y ago

bsimpson 8y ago

In exchange for the $30 an hour, you get a meaningless phone call from someone who works there every couple months and access to a terrible health plan. My plan was literally "pay $100 per month to avoid the 2% Obamacare tax." It covered basically nothing, and the deductible was ridiculous. The only value "talent agencies" add is that you can start earning money immediately, instead of jumping through whatever hoops vendors need to jump through to be approved nowadays.

protomyth 8y ago
You got hooked up with someone bad, which is a shame. I had a great health plan as a contractor (through my agency) and they were great about finding fun jobs. I do know a lot of agents didn't tell folks what rate they were being billed out at (I suspect that $30/hour would mean you are not getting good value), but my pay was a % of the bill rate.
- bsimpson 8y ago
  I actually negotiated my pay with the hiring manager. I have no idea what the agency was paid. I got the invitation directly from the large company I was consulting for. They explained to me that they didn't work directly with freelancers; they had processes in place to prevent TVCs from being retroactively deemed FTEs (and compensated for withheld benefits). Therefore, they put me in touch with an agency whose only function was to hire freelancers as W2 employees and rent them back out to the company. I don't recall exactly: I think the agency's only client was the firm I was consulting for. They might have had 1 or 2 more. The whole we-only-exist-because-bureaucracy was pretty transparent. Funny story: one of the TVC restrictions was that you could only be one for a year. (At the end of the year, you had to either convert to full-time or take 6 months off.) Partway through the year, my client decided they wanted to switch agencies. Thousands of us got an email that basically said "As of next week, you legally work for Other Agency. Your day-to-day work will be the same."
  - protomyth 8y ago
    Uhm.... that sounds really, really shady. If you do the negotiating then they've failed at 90% of their job, and I suspect you most certainly didn't get your full value.
    - bsimpson 8y ago
      They chose an inaccurate job title for me to justify my salary. Maybe I could have made more freelancing somewhere else, but I think I was at the top of what this role was willing to pay. I was making $100 per hour with a guaranteed 40 billable hours per week.
      - protomyth 8y ago
        Well, I'm glad you got something decent out of it. I have a bit of a visceral reaction to bad actors in agencies since their actions had consequences. It was very informative at one place I worked where a ticked off employee released a spreadsheet with all of the hourly rates for all the consultants. I was rather amused to lean how many bad actor agencies there were (although gratified that I worked with the honest sort). It was a bit amazing to me that people were baffled that I didn't really want to look at the spreadsheet. I knew my rate, was pretty happy, and was a bit worried it would impact how I viewed others.
Dylan16807 8y ago
> In exchange for the $30 an hour, you get a meaningless phone call from someone who works there every couple months and access to a terrible health plan. And you no longer have to pay $9 of social security and medicare employer taxes, right?
- delinka 8y ago
  You still pay that. And yes, it's wrapped up in that $30. Yes, someone is providing a 'service' for 30% of your billing, but you can't shop around to get better and/or less expensive service.
  - Dylan16807 8y ago
    > You still pay that. And yes, it's wrapped up in that $30. That's a confusing way of putting it. > Yes, someone is providing a 'service' for 30% of your billing And that's pretty misleading as a followup. You're paying them 30% to perform services and to pay that 9% tax for you. So you're effectively paying closer to 21% for their services. That's still a lot. But it's significantly less.
    - bsimpson 8y ago
      A quick search of Wikipedia says the employer's share of FICA is 7.65% of the employee's gross wages: https://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act_tax#Regularly_employed_people https://en.wikipedia.org/wiki/Federal_Insurance_Contribution...