Classic Misclassified Worker Scenario
One more domestic story from my stay-at-home week: the neighbor’s kid takes a freelance job.
I was recently home for a week watching television, sleeping and fighting off a bug. I was feeling better later in the week and took a walk around the neighborhood. As I passed my neighbor’s house, their 23 year old daughter was getting out of her car. She smiled and waved at me. She was dressed in a very professional business suit. I was used to seeing her in jeans or shorts, so seeing her dressed so professionally I thought maybe she had a job interview.
She graduated from college in May 2009, and for the past year had been sending out resumes in an attempt to join the working ranks of young adults with a career job. Like many of her classmates, I knew she has been frustrated-not even getting an interview. I thought maybe her luck had changed and she’d had an interview today, so I asked…
“Did you have an interview today?”
Her luck changed last month
“No, I’m working! I’m a freelance software engineer with (company name). I started last month! I love it!” She was her usual vibrant self.
We talked about her new job for several minutes and I learned that:
- For the past year she had been sending resumes out everywhere possible, searching websites, talking to contacts, doing everything she could to find a job.
- This position came along and they told her they were only accepting new people on a freelance basis-as independent contractors.
- She showed me her new ID badge with her picture, the company name and her title: Contract Engineer.
- She works Monday through Friday-8:30 AM to 6:00 PM.
- The pay is lower than she hoped for but she expects it will get better after she learns more.
- She is provided with a work station, computer and supplies.
- She thinks her boss is great-he’s so helpful and willing to teach her what she needs to know about their systems and her duties.
- She’s hoping a permanent position will be offered to her. In fact, the young man working in the cubicle next to her started three years ago, on a freelance basis, and is now an associate engineer with a full benefit package.
- She’s very excited about this opportunity-a chance to get experience and a shot at a real career…
I didn’t want to burst her bubble, but I thought to myself, “Classic Misclassified!”
Her story is a textbook example, used in training for government tax auditors, of a misclassified worker. It’s the “I just needed a job and agreed to do it because it was offered…” scenario.
There’s a classification time bomb ticking in this engineering company…
One of these days, a “freelance” engineer at this company will be let go or decide he/she is getting a raw deal and either:
- Apply for Unemployment Insurance benefits, or
- Get hurt on the job and file a workers comp claim, or
- Hire an attorney to file suit for employee benefits.
The whistle blower most likely will not be my neighbor’s daughter. It’s not her personality. However, based on what she told me, I believe the company is utilizing a few dozen “freelancers” and the odds one or more of them will eventually turn on the company is pretty high. When that happens the company is in for a rough and expensive wake up call.
Hopefully this company will decide to seek out an expert advisor, like Collabrus, before the Department of Labor, IRS, EDD or a civil lawsuit knocks on their door.
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