[einarvollset]

It will probably come as a surprise to you (it did me several years ago), that it’s not simply up to you and the company hiring you if you are considered a freelancer.

This is not a matter of billable vs guaranteed hours. It’s a classification based on employee control over the person in question.

In fact, if you were micro directing the people you paid 1099, you may have had what the state of NY would consider an employee. Yes you’ll probably never get found out, but that doesn’t negate the fact.

[nickjj]

> It will probably come as a surprise to you (it did me several years ago), that it’s not simply up to you and the company hiring you if you are considered a freelancer.

Where do you draw the line?

Let's say you hire someone for 3 hours to help you out for a specific task. A "I would like X done with Y" type of scenario. Are they now considered an employee?

What if you asked someone to do a code review for 5 hours where you precisely told them what to do, but it's on them to determine the state of the code? Also an employee? Does your answer change if you asked them to do this 1 hour a week for a year?

Here's another example. A company hired me to do X. This ended up being a ~100 hour project. They gave me a checklist of deliverables and a pretty decent break down on how to implement everything. They let me choose the tech (but had suggestions on what to use) and how the application functioned was defined by them. Am I an employee and if so, what if I worked 20 hours a week until it was done vs 50 hours a week -- does that change anything?

Scenarios like the above are really common in the freelance world. You get a super wide range of work thrown at you (as you know).

I've talked with a number of accountants over the years and always told them everything I've been up to. I was never once recommended to classify myself as a W2 employee, or be on the hook for hiring a W2 employee for short term contract work that I provided someone. It's always been 1099s in and 1099s out.

[athenot]

Not legal advice but...

Usually in your situation you will have your own computer, your own workspace (except for meetings with the client), and deliver things based on a predefined scope (or predefined set of expectations). That's good enough to make you a freelancer.

On the other hand, if the company told you to use their laptop, show up in their office, work using their methods—effectively manage how you work... that becomes W2 territory.

Taking a step back, you're respecting the spirit of things. The company has a need, you have a solution, y'all have a transaction. On the other hand, if they were to integrate you as part of a team, within their processes, that's a W2.

Of course in practice there's a third way that is common: large company A makes use of an intermediary contracting company B that they can pay as needed[0], and the contractors are W2 salaried of B, while A maintains all their flexibility.

[0] Generally for all the crappy work that they don't want to do themselves. If you find yourself working for B, make it a learning experience and a personal goal to move beyond it.

[TimPC]

Using company equipment gets complicated pretty fast. Some 'contractors' have to use company equipment because the company won't allow proprietary or regulated data on machines they don't own. Is that enough to make someone an employee?

[nickjj]

Yeah and it gets even more grey because what if you're using your own computer but you have to connect to hardware that the company owns such as a server, or even servers on the cloud that the company is renting and paying for.

Technically you're using something that belongs to them. Then there's the case of connecting through their VPN too.

Then it's like, why would using a company laptop to SSH into a company owned server be any different than using your own laptop to connect to a company SSH server.

And of course, what if you did great work for that company as a contract worker and they decided to give you a laptop as a bonus / gift. Or more realistically the thing you're developing requires a lot more hardware than your current machine so as part of the contract you signed, they will provide you an extra $1,500 up front to purchase a computer upgrade. Technically you bought the computer so it's not the company's. The greyness never ends haha.

[nordsieck]

>> it’s not simply up to you and the company hiring you if you are considered a freelancer.

> Where do you draw the line?

From the IRS[1]:

> The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done. Small businesses should consider all evidence of the degree of control and independence in the employer/worker relationship. Whether a worker is an independent contractor or employee depends on the facts in each situation.

...

> Written contracts which describe the relationship the parties intend to create. Although a contract stating the worker is an employee or an independent contractor is not sufficient to determine the worker’s status. ___

1. https://www.irs.gov/newsroom/understanding-employee-vs-contr...

[nickjj]

> The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work, not what will be done and how it will be done

Using this IRS logic then I wonder if most employees are really contractors.

If you're hired as an employee to work on project X, a manager would likely not even know how it will be done. They aren't going to write out the programming code logic for you (that's your job as the employee). They might give you business rules such as "it needs to do XYZ", but that's much different than "how it will be done".

[einarvollset]

"Where do you draw the line?"

That's the ting, there is no exact science here. It's an interpretation by the relevant state agency (like most taxes really).

For example, CA has been cracking down hard lately, dunno about NYS. Obviously enforcement is selective - better for the state to go after someone big like Lyft/Uber rather than you. Does not mean that you're in the right just because you didn't get your election scrutinized.

And FWIW - your accountants are right in that it's beneficial and probably totally fine to 1099. But ask them to guarantee that the state won't go after you for it and watch them squirm :D

[nqzero]

> relevant state agency

the federal govt as well (the irs has a 20 point checklist to help make the determination)

every contract i've ever gotten in the last 10 years has required that i indemnify the company against being classified as a worker, and then given instructions that violate that checklist, and been upset when i pushed back

started looking for a w2 on tuesday :(

https://galachoruses.org/sites/default/files/IRS-20-question...

[CodeCube]

It's not really that complicated. If it's a short term engagement (3 hours literally once), then 1099. If you need them for 3 hours every week, then consider hiring them as a part time employee ... it's a long term relationship at that point. If you need 3 hours every week and engage a temp agency, then chances are you'll get a different person (even if they send the same person a few times in a row). If you engage a "temp agency" that's literally just a front for one person ... that's an employee and should be treated as such.