Replies

It hasn’t actually happened yet. I was asked to do something that would violate the law and I said no I would not do it. Then I was told it might be better if I didn’t work here as an employee so they would change me to a contract worker.
I don’t know why they would want to do that. I’m still not going to do what they are asking if it’s illegal.

wow, sounds like time to explore other opportunities.

I am sorry to hear that you are in this situation.

If they change you to a contracted employee, it will depend on the state as to whether you qualify for unemployment. Possibly you will be able to collect, but have to report the income in any weeks that you receive payments based on your contracted work.

As a contracted employee, you should ask for a written contract, so you both know the terms. It is likely they will shift you to a situation wherein you have to “bill” them for your pay.

Your income will be reported on 1099s, not W2s, and you will be responsible for paying social security taxes and the employer share, as a self-employed person. You may also have to file quarterly federal income tax estimates/payments.

You may be able to get “free” health insurance, if it seems you will have no income or very low income.

If your employer wants to change ONLY your status, but you would still have all the other criteria such as responsibilities, performance standards, etc., then they are pushing another illegal act. As a contracted worker, you could theoretically do the same work for several firms. If the employer will continue to provide you with a work space, computer, phone, etc., and has the say over how you spend your “work time”, then you would technically still be an employee.

It hasn’t actually happened yet. I was asked to do something that would violate the law and I said no I would not do it. Then I was told it might be better if I didn’t work here as an employee so they would change me to a contract worker. I don’t know why they would want to do that. I’m still not going to do what they are asking if it’s illegal.

IRS doesn't recognize such "status changes"; if there is no change in the relationship they will regard you as an employee and the employer will be held liable for all employee and employer withholdings - even if you set up a corporation for yourself and your corporation paid all withholdings, i.e., employee (you) and employer (your corporation). Yes, the IRS can still go after the company you are billing if the IRS determines, according to IRS regulations, that you are actually functioning as an employee of that company. Yes, that means IRS will collect the withholdings twice, as they will not refund the withholdings your corporation sent in for you. The "tough stance" is meant to discourage businesses from "scamming" and making employees contractors when they really are doing exactly the same jobs and are NOT functioning as a real business, which would have a business-to-business relationship with the original employer, i.e., be able to negotiate contracts, substitute employees doing the work, etc.