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Can someone knowledgeable explain this “tax dodge”? I was under the impression that the issue GP underlines (giving a contractor shirt/pencil) is more about avo

Can someone knowledgeable explain this “tax dodge”? I was under the impression that the issue GP underlines (giving a contractor shirt/pencil) is more about avoiding misclassification and stems from a lawsuit by Microsoft contractors claiming to be common law employees based on how they were treated and then demanding additional employee-only benefits.

notaustinpowers 3y ago
I don't work at Google so I don't know if this is exactly what is happening, but I've worked on both ends of something similar before and this is (usually) what happens. Company A wants to hire employees to perform Task A. Task A has a lot of legal overhead or paying taxes for employees and Company A would rather not deal with that. So Company A hires Company B as a contractor, meaning Company B is primarily responsible for the legal overhead and tax liability of Task A and Company B's employees. As a contractor relationship, Company A is not able to demand Company B do certain things (such as Company A dictating what Company B pays employees, or setting PTO policies, etc). Usually, they are only able to set standards that Company B must meet to maintain that contract for Task A. It's possible Company A here (Google) may have overstepped and began instituting requirements or policies on the employees of Company B, which leads to the misclassification of employment. Google may say "They're not our employees" but if they're overstepping their bounds then they might actually be considered Google employees. If it walks like a duck and quacks like a duck, I can say it's a pigeon all day long but everyone knows it's a duck.
- refulgentis 3y ago
  I'm not comfortable being too specific publicly but I guess I'm just wondering about the legal implications if Company A was more like: "screw it, let's have them be de facto members of the team: do the same work on the same days, and move on once we hit the 'too long to lie' mark" and steadily moved to that arrangement for a significant amount of work for a large portion of job functions.
  - Manuel_D 3y ago
    > screw it, let's have them be de facto members of the team: do the same work on the same days, and move on once we hit the 'too long to lie' mark" and steadily moved to that arrangement for a significant amount of work for a large portion of job functions Correct, that would be abusing contract work. But while there have been people insisting that this happens, I have yet to see someone substantiate these allegations.
    - refulgentis 3y ago
      Ah I just realized I'm replying to you in two separate subthreads: tl;dr oh yes. 100% yes. but it's unclear what your bar for confirmation is and its not a good idea to just start free associating from 'source?'. https://news.ycombinator.com/item?id=38875022 https://news.ycombinator.com/item?id=38875022
      - Manuel_D 3y ago
        That just links to a hacker news comments, which links to a hacker news comment, which links to yet another hacker news comment that just postulates that Google is abusing contract work to do the same work as full time employees but doesn't describe any incident of this occurring. In fact, the end of your linked list is the grandparent of this comment chain. Is there more compelling evidence that Google has used contractors in place of FTEs than HN users insisting it's happening with no other evidence?
    - bugglebeetle 3y ago
      …this is more or less what the NLRB ruled Google did, so I don’t know what else would have to be substantiated at this point.
      - Manuel_D 3y ago
        No, the NRLB is trying to argue that RTO policies and number of sick days means Google is now in the role of the employer. There is nothing at all in the ruling that says these contractor were performing the same work as employees.
- jacquesm 3y ago
  Another factor is how transparent it is to an outsider (say a judge) whether or not the contractor is a real entity with multiple customers who all have similar kinds of deals. And whether the entity goes out of business while leaving a bunch of stuff unpaid when the work is done. And whether or not the entity happens to be managed by people who happen to have a cozy relationship with the mothership. Pretending it is at arms length when it is actually the same thing is a really annoying thing that big companies do in order to jack up their bottom line. I wonder if there are any tech giants that are not in one way or another committing crimes. I somewhat doubt it.
  - IG_Semmelweiss 3y ago
    We are talking about cognizant here. Not a fly by night operation. Which entities are you referring to , with which google has a relationship that is not arms length?
    - jacquesm 3y ago
      https://telecom.economictimes.indiatimes.com/news/inside-googles-shadow-workforce-of-contract-labourers/65146177 https://telecom.economictimes.indiatimes.com/news/inside-goo... This isn't a minor problem, it's a massive problem. The scale of which may have escaped you but it certainly didn't escape Google's accountants who are laughing all the way to the bank. The fact that it is Cognizant here makes it a larger problem, not a smaller one and even if they appear not to be an overt fly-by-night operation they certainly perform a useful function for Google in isolating them from their workforce. Or did you think they keep all of these employees at arms length out of the goodness of their hearts?
      - roenxi 3y ago
        > Or did you think they keep all of these employees at arms length out of the goodness of their hearts? That is hardly fair; this is business. Nobody is there out of the goodness of their hearts. It isn't like Google is made up of people who have a deep personal belief that the best thing they can be doing on weekdays is working out how to funnel more people into the big advertising network. The law gives contractors a big financial advantage over FTEs. Google hires contractors over FTEs. They're obviously toeing the line as closely as they can because they'd rather have FTEs at the price of a contractor, and they've overstepped it here, but they're just working under the regulations they're given. This mania for trying to push situations away from the market equilibrium really needs to settle down. My guess is if pushed much further, it'll get outsourced to a different company in a different country. It is nigh impossible to convince a market to pay substantially more than the market value of something.
- bediger4000 3y ago
  Company B is often based out of state, so B is often not obligated to do California legal things.

notaustinpowers 3y ago

I don't work at Google so I don't know if this is exactly what is happening, but I've worked on both ends of something similar before and this is (usually) what happens. Company A wants to hire employees to perform Task A. Task A has a lot of legal overhead or paying taxes for employees and Company A would rather not deal with that. So Company A hires Company B as a contractor, meaning Company B is primarily responsible for the legal overhead and tax liability of Task A and Company B's employees. As a contractor relationship, Company A is not able to demand Company B do certain things (such as Company A dictating what Company B pays employees, or setting PTO policies, etc). Usually, they are only able to set standards that Company B must meet to maintain that contract for Task A. It's possible Company A here (Google) may have overstepped and began instituting requirements or policies on the employees of Company B, which leads to the misclassification of employment. Google may say "They're not our employees" but if they're overstepping their bounds then they might actually be considered Google employees. If it walks like a duck and quacks like a duck, I can say it's a pigeon all day long but everyone knows it's a duck.

refulgentis 3y ago
I'm not comfortable being too specific publicly but I guess I'm just wondering about the legal implications if Company A was more like: "screw it, let's have them be de facto members of the team: do the same work on the same days, and move on once we hit the 'too long to lie' mark" and steadily moved to that arrangement for a significant amount of work for a large portion of job functions.
- Manuel_D 3y ago
  > screw it, let's have them be de facto members of the team: do the same work on the same days, and move on once we hit the 'too long to lie' mark" and steadily moved to that arrangement for a significant amount of work for a large portion of job functions Correct, that would be abusing contract work. But while there have been people insisting that this happens, I have yet to see someone substantiate these allegations.
  - refulgentis 3y ago
    Ah I just realized I'm replying to you in two separate subthreads: tl;dr oh yes. 100% yes. but it's unclear what your bar for confirmation is and its not a good idea to just start free associating from 'source?'. https://news.ycombinator.com/item?id=38875022 https://news.ycombinator.com/item?id=38875022
    - Manuel_D 3y ago
      That just links to a hacker news comments, which links to a hacker news comment, which links to yet another hacker news comment that just postulates that Google is abusing contract work to do the same work as full time employees but doesn't describe any incident of this occurring. In fact, the end of your linked list is the grandparent of this comment chain. Is there more compelling evidence that Google has used contractors in place of FTEs than HN users insisting it's happening with no other evidence?
  - bugglebeetle 3y ago
    …this is more or less what the NLRB ruled Google did, so I don’t know what else would have to be substantiated at this point.
    - Manuel_D 3y ago
      No, the NRLB is trying to argue that RTO policies and number of sick days means Google is now in the role of the employer. There is nothing at all in the ruling that says these contractor were performing the same work as employees.
jacquesm 3y ago
Another factor is how transparent it is to an outsider (say a judge) whether or not the contractor is a real entity with multiple customers who all have similar kinds of deals. And whether the entity goes out of business while leaving a bunch of stuff unpaid when the work is done. And whether or not the entity happens to be managed by people who happen to have a cozy relationship with the mothership. Pretending it is at arms length when it is actually the same thing is a really annoying thing that big companies do in order to jack up their bottom line. I wonder if there are any tech giants that are not in one way or another committing crimes. I somewhat doubt it.
- IG_Semmelweiss 3y ago
  We are talking about cognizant here. Not a fly by night operation. Which entities are you referring to , with which google has a relationship that is not arms length?
  - jacquesm 3y ago
    https://telecom.economictimes.indiatimes.com/news/inside-googles-shadow-workforce-of-contract-labourers/65146177 https://telecom.economictimes.indiatimes.com/news/inside-goo... This isn't a minor problem, it's a massive problem. The scale of which may have escaped you but it certainly didn't escape Google's accountants who are laughing all the way to the bank. The fact that it is Cognizant here makes it a larger problem, not a smaller one and even if they appear not to be an overt fly-by-night operation they certainly perform a useful function for Google in isolating them from their workforce. Or did you think they keep all of these employees at arms length out of the goodness of their hearts?
    - roenxi 3y ago
      > Or did you think they keep all of these employees at arms length out of the goodness of their hearts? That is hardly fair; this is business. Nobody is there out of the goodness of their hearts. It isn't like Google is made up of people who have a deep personal belief that the best thing they can be doing on weekdays is working out how to funnel more people into the big advertising network. The law gives contractors a big financial advantage over FTEs. Google hires contractors over FTEs. They're obviously toeing the line as closely as they can because they'd rather have FTEs at the price of a contractor, and they've overstepped it here, but they're just working under the regulations they're given. This mania for trying to push situations away from the market equilibrium really needs to settle down. My guess is if pushed much further, it'll get outsourced to a different company in a different country. It is nigh impossible to convince a market to pay substantially more than the market value of something.
bediger4000 3y ago
Company B is often based out of state, so B is often not obligated to do California legal things.