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Being an independent contractor even if you only have one client can have many benefits, I am astounded to hear that it can be illegal. It's a great way to bett

Being an independent contractor even if you only have one client can have many benefits, I am astounded to hear that it can be illegal. It's a great way to better allocate how your pay gets spent (benefits, perks, parties, etc) if you disagree with how the company does it, and it also grants you many other freedoms like retaining IP rights, paystructures (hourly vs salary), etc unlike normal employees. At the cost of complexity, you get freedom.

wolverine876 3y ago
> I am astounded to hear that it can be illegal Is it really news to you? There's also another reason - companies trying to duck various taxes tied to employment. > At the cost of complexity There are many more costs than that, including loss of a lot of negotiating leverage, job security, and opportunity for advancement.
- chii 3y ago
  > companies trying to duck various taxes tied to employment. surely the contracting company gets to pay that tax, rather than the client.
  - wolverine876 3y ago
    Often a contractor isn't a company but an individual with few resources, including money, time and knowledge for processing and paying taxes.
    - Dylan16807 3y ago
      Dealing with such things is exactly why a contractor is supposed to charge more per hour. I expect a basic rule like "Hire an accountant if you don't want to figure out all this stuff." to be contracting 101.
- shiroiuma 3y ago
  What if you don't care about job security? There's many good reasons for being a contractor. I used to be a contractor for the US government, and worked alongside civilian government employees. They tried to even hire me away from my employer (the contractor), and I refused: there just wasn't a good reason. The problem with being a government employee is that the pay is terrible, and also the retirement system is only good if you're a life-long government employee (there's no 401k). If you just want to stay in that job for the rest of your career, it's a great deal, though the pay isn't great, because the job security is fantastic and the retirement benefits are solid if you put in all those years (basically you get a good portion of your last salary until you die). But the cost is that your current pay is lousy: as a software dev, I made much more money than my coworkers, plus I got to save some in an employer-matched 401k account. The government can't find that many people who want the safe, low-pay employment option they offer, particularly for software/IT jobs, so they turn to contractors to provide those people and offer them a type of employment (high-pay, not-so-safe) that the government simply can't do on its own. It's the same with many big companies: hiring and firing is difficult and expensive for them, so they turn to 3rd-party contracting firms. It costs them: each contractor costs quite a bit more than a regular employee, but they don't have to deal with the other problems that come with regular employees. There's drawbacks, however; contractors aren't in it for the long term, so if you find a contractor you really like, you try to get them to join the company directly.
  - wolverine876 3y ago
    I understand the trade-offs. Nobody prevents you from being a contractor if that's what you like. But there are also reasons to be an employee, and to prevent corporations from pretending employment is contracting.
    - shiroiuma 3y ago
      In my experience, I honestly didn't see much difference between myself and the regular gov employees. We did the same work, on the same projects, in the same offices, etc. The only differences were that I had to additionally report to my own company on my progress, and I got paid differently (and more of course). It really was just an end-run around the government's own inability to offer this form of employment on their own, and also to use the contracting firm as a sort of recruiting agency. I saw the exact same thing (but from the employee side) when I worked at a huge tech company. Using contractors was a way of getting people in quickly (much faster than normal recruiting), and also being able to get rid of them quickly if they're bad workers: just don't renew their contract after 6 months. Good ones were hired as regular employees because it was cheaper long-term.
spywaregorilla 3y ago
these people all work for a company whose sole job is to exist as an off the books shell company that is allowed to give inferior benefits. They have none of those freedoms.
lowbloodsugar 3y ago
It's certainly not illegal. But it can be identified by government agencies as an employer/employee relationship. The IRS is very likely to treat you as an employee and tax you, and your "employer" as such, for example.
lmm 3y ago
> better allocate how your pay gets spent (benefits, perks, parties, etc) if you disagree with how the company does it, and it also grants you many other freedoms like retaining IP rights, paystructures (hourly vs salary), etc unlike normal employees. You can do all those things as a normal employee (perhaps a company lied to you that they couldn't?). Companies offer contractors higher pay and/or better benefits because they want to shirk their legal obligations to employees, there's nothing that would actually prevent them from offering those better terms to employees.
- scottyah 3y ago
  At large companies that I've worked for, HR policies on hiring are quite strict and don't give managers much wiggle room to bargain without creating quite a hassle that's usually not worth the effort. If I were extremely valuable, perhaps a case and exception could be made but most at the company do not want to go that route. Hiring as a contractor creates a much more decoupled interface, and they don't have to refactor all their HR policies for one exception.
oblio 3y ago
> Being an independent contractor even if you only have one client can have many benefits, I am astounded to hear that it can be illegal. In places where it's implemented it's not JUST about having 1 customer. It's having 1 customer: - for a long time (years and years) - having basically the same restrictions as regular employees (same working hours, can't set your own; same work location, their office, can't set your own; usually the exact same IP restrictions as employees, etc) At that point, you're basically an employee without any legal protections. In places where employees actually have legal protections.

wolverine876 3y ago

> I am astounded to hear that it can be illegal Is it really news to you? There's also another reason - companies trying to duck various taxes tied to employment. > At the cost of complexity There are many more costs than that, including loss of a lot of negotiating leverage, job security, and opportunity for advancement.

chii 3y ago
> companies trying to duck various taxes tied to employment. surely the contracting company gets to pay that tax, rather than the client.
- wolverine876 3y ago
  Often a contractor isn't a company but an individual with few resources, including money, time and knowledge for processing and paying taxes.
  - Dylan16807 3y ago
    Dealing with such things is exactly why a contractor is supposed to charge more per hour. I expect a basic rule like "Hire an accountant if you don't want to figure out all this stuff." to be contracting 101.
shiroiuma 3y ago
What if you don't care about job security? There's many good reasons for being a contractor. I used to be a contractor for the US government, and worked alongside civilian government employees. They tried to even hire me away from my employer (the contractor), and I refused: there just wasn't a good reason. The problem with being a government employee is that the pay is terrible, and also the retirement system is only good if you're a life-long government employee (there's no 401k). If you just want to stay in that job for the rest of your career, it's a great deal, though the pay isn't great, because the job security is fantastic and the retirement benefits are solid if you put in all those years (basically you get a good portion of your last salary until you die). But the cost is that your current pay is lousy: as a software dev, I made much more money than my coworkers, plus I got to save some in an employer-matched 401k account. The government can't find that many people who want the safe, low-pay employment option they offer, particularly for software/IT jobs, so they turn to contractors to provide those people and offer them a type of employment (high-pay, not-so-safe) that the government simply can't do on its own. It's the same with many big companies: hiring and firing is difficult and expensive for them, so they turn to 3rd-party contracting firms. It costs them: each contractor costs quite a bit more than a regular employee, but they don't have to deal with the other problems that come with regular employees. There's drawbacks, however; contractors aren't in it for the long term, so if you find a contractor you really like, you try to get them to join the company directly.
- wolverine876 3y ago
  I understand the trade-offs. Nobody prevents you from being a contractor if that's what you like. But there are also reasons to be an employee, and to prevent corporations from pretending employment is contracting.
  - shiroiuma 3y ago
    In my experience, I honestly didn't see much difference between myself and the regular gov employees. We did the same work, on the same projects, in the same offices, etc. The only differences were that I had to additionally report to my own company on my progress, and I got paid differently (and more of course). It really was just an end-run around the government's own inability to offer this form of employment on their own, and also to use the contracting firm as a sort of recruiting agency. I saw the exact same thing (but from the employee side) when I worked at a huge tech company. Using contractors was a way of getting people in quickly (much faster than normal recruiting), and also being able to get rid of them quickly if they're bad workers: just don't renew their contract after 6 months. Good ones were hired as regular employees because it was cheaper long-term.

spywaregorilla 3y ago

these people all work for a company whose sole job is to exist as an off the books shell company that is allowed to give inferior benefits. They have none of those freedoms.

lowbloodsugar 3y ago

It's certainly not illegal. But it can be identified by government agencies as an employer/employee relationship. The IRS is very likely to treat you as an employee and tax you, and your "employer" as such, for example.

lmm 3y ago

> better allocate how your pay gets spent (benefits, perks, parties, etc) if you disagree with how the company does it, and it also grants you many other freedoms like retaining IP rights, paystructures (hourly vs salary), etc unlike normal employees. You can do all those things as a normal employee (perhaps a company lied to you that they couldn't?). Companies offer contractors higher pay and/or better benefits because they want to shirk their legal obligations to employees, there's nothing that would actually prevent them from offering those better terms to employees.

scottyah 3y ago
At large companies that I've worked for, HR policies on hiring are quite strict and don't give managers much wiggle room to bargain without creating quite a hassle that's usually not worth the effort. If I were extremely valuable, perhaps a case and exception could be made but most at the company do not want to go that route. Hiring as a contractor creates a much more decoupled interface, and they don't have to refactor all their HR policies for one exception.

oblio 3y ago

> Being an independent contractor even if you only have one client can have many benefits, I am astounded to hear that it can be illegal. In places where it's implemented it's not JUST about having 1 customer. It's having 1 customer: - for a long time (years and years) - having basically the same restrictions as regular employees (same working hours, can't set your own; same work location, their office, can't set your own; usually the exact same IP restrictions as employees, etc) At that point, you're basically an employee without any legal protections. In places where employees actually have legal protections.