"hired" as a "consultant" but treated as an employee

[yerasimos]

I was wondering if anyone had a work experience whereby a prospective employer "hired" you as a "consultant", where you would submit invoices for your work/services performed, get paid without any withholding, and you would be responsible for paying any/all taxes and completing related paperwork---but they insisted upon otherwise processing you as they would a regular employee (physical exam, background check, drug test . . .)

[Purplehood]

I was wondering if anyone had a work experience whereby a prospective employer "hired" you as a "consultant", where you would submit invoices for your work/services performed, get paid without any withholding, and you would be responsible for paying any/all taxes and completing related paperwork---but they insisted upon otherwise processing you as they would a regular employee (physical exam, background check, drug test . . .)

You might want to check with someone specializing in HR. Depending on who the employer is, some of that may be stepping over the line.

[GeekwithaGun]

I'm a 1099 contractor/consultant and had to submit to a background check, but there was no physical exam required. There have been some things I had to comply with that regular employee's, but not a physical exam.

[WildBill]

If you are consulting for a company that has government contracts, such as DOD, this is common, especially if you have to visit government facilities or sub-contractors. The background check was required for badging for limited access areas and secure areas.

In the past, when I worked as a contractor for a defense company I also had to take a physical exam. This was because some of my work was in a processing area where I could be exposed to hazardous chemicals. I was told that this was to establish a "base-line" medical history. As I recall, a physical/medical exam was not required for people who worked only in office areas.

[Crossfire]

I have not had to undergo a physical exam, but yes to drug and background screening for a 1099 type employee.

[jimlongley]

I have had that happen a couple of times, at Motorola I was hired as a contract technical trainer but was actually working for and paid by a contract company, but Motorola did the whole new employee bit with me. The job was potentially contract to hire and they said they just wanted to be able to just flip my card when the time came.

I was also a contract trainer for another company, and I never even met my boss, went to headquarters, took any tests, or anything like that, and it was another temp to perm job. The job actually fell apart when the company was sold and downsized, and they never even called to get their laptop, inventory forms, parts replacement order forms, or ID card back.

Another contract trainer job fell about half way between the extremes, had to have a security check to get the ID card, but they depended on my company to do everything else.

I have been a 1099 contractor too, but never had to have much done other than to show up to work.

[WildBill]

I have not had to undergo a physical exam, but yes to drug and background screening for a 1099 type employee.

I have read government contracts that require companies/subcontractors to comply with "Drugfree Workplace" policies.

[FL450]

I know that from hiring contract pilots the IRS has been cracking down on employers who hire contract labor( The IRS definition of contract labor is that you contract them for a job. if you tell them what time to show up and when to leave than don't fall under iRS contract guidelines. Stupas as it seems I guess they feel like their getting cheated out of taxes.
Don't ask me how because the contractor still pays all of the SS tax.
Because of this a lot of companies just put you on the payroll.

[WildBill]

I know that from hiring contract pilots the IRS has been cracking down on employers who hire contract labor (The IRS definition of contract labor is that you contract them for a job. if you tell them what time to show up and when to leave than don't fall under IRS contract guidelines. Stupas as it seems I guess they feel like their getting cheated out of taxes. Don't ask me how because the contractor still pays all of the SS tax. Because of this a lot of companies just put you on the payroll.

This has been going on since I worked as a contractor in the 1980s. The issue is not so much with SSI taxes, but with Federal Income Taxes. The IRS has had problems with many 1099 contractors who went through contract agencies not paying their Federal Income taxes so they have tried to go back to the contracting agency to collect owned taxes. The IRS have not been too successful since the companies hire "independent contractors". Nevertheless, companies do not like having to deal with hassles between contractors and the IRS, so many of them try to avoid hiring 1099 contractors.

[yerasimos]

This has been going on since I worked as a contractor in the 1980s. The issue is not so much with SSI taxes, but with Federal Income Taxes. The IRS has had problems with many 1099 contractors who went through contract agencies not paying their Federal Income taxes so they have tried to go back to the contracting agency to collect owned taxes. The IRS have not been too successful since the companies hire "independent contractors". Nevertheless, companies do not like having to deal with hassles between contractors and the IRS, so many of them try to avoid hiring 1099 contractors.

Because of all of this potential hassle, I cannot figure out why a place would willfully pursue the route of "hiring" a "consultant" without any intermediary agency, carefully not "employing" that person, but then turning around and otherwise treating him exactly as an employee. It makes no obvious sense.

[WildBill]

This has been going on since I worked as a contractor in the 1980s. The issue is not so much with SSI taxes, but with Federal Income Taxes. The IRS has had problems with many 1099 contractors who went through contract agencies not paying their Federal Income taxes so they have tried to go back to the contracting agency to collect owned taxes. The IRS have not been too successful since the companies hire "independent contractors". Nevertheless, companies do not like having to deal with hassles between contractors and the IRS, so many of them try to avoid hiring 1099 contractors.

Because of all of this potential hassle, I cannot figure out why a place would willfully pursue the route of "hiring" a "consultant" without any intermediary agency, carefully not "employing" that person, but then turning around and otherwise treating him exactly as an employee. It makes no obvious sense.

I can't entirely explain it, but some of it has to do with the government's requirements for contractors to purchase a certain amount of materials and services from small businesses, minority-owned businesses, veteran owned-businesses, etc.

[yerasimos]

This has been going on since I worked as a contractor in the 1980s. The issue is not so much with SSI taxes, but with Federal Income Taxes. The IRS has had problems with many 1099 contractors who went through contract agencies not paying their Federal Income taxes so they have tried to go back to the contracting agency to collect owned taxes. The IRS have not been too successful since the companies hire "independent contractors". Nevertheless, companies do not like having to deal with hassles between contractors and the IRS, so many of them try to avoid hiring 1099 contractors.

Because of all of this potential hassle, I cannot figure out why a place would willfully pursue the route of "hiring" a "consultant" without any intermediary agency, carefully not "employing" that person, but then turning around and otherwise treating him exactly as an employee. It makes no obvious sense.

I can't entirely explain it, but some of it has to do with the government's requirements for contractors to purchase a certain amount of materials and services from small businesses, minority-owned businesses, veteran owned-businesses, etc.

Suppose the public sector is not involved in this scenario, except for receiving tax, SSI and whatever else would be required from the "consultant".

[WildBill]

Suppose the public sector is not involved in this scenario, except for receiving tax, SSI and whatever else would be required from the "consultant".

I am not sure what your question is.

[yerasimos]

Suppose the public sector is not involved in this scenario, except for receiving tax, SSI and whatever else would be required from the "consultant".

I am not quite getting your question. Another reason for hiring an "independent consultant" is so the company does not have to pay them benefits such as medical, disability and life insurance and 401 retirement.

I simply wanted to reframe the discussion away from the defense/government contracting considerations, toward a more general context.

I can understand avoiding benefits at the outset. Why not simply omit benefits for an initial three to six month probationary employment period, instead of a weird "consultant" arrangement?

[WildBill]

Suppose the public sector is not involved in this scenario, except for receiving tax, SSI and whatever else would be required from the "consultant".

I am not quite getting your question. Another reason for hiring an "independent consultant" is so the company does not have to pay them benefits such as medical, disability and life insurance and 401 retirement.

I simply wanted to reframe the discussion away from the defense/government contracting considerations, toward a more general context.

I can understand avoiding benefits at the outset. Why not simply omit benefits for an initial three to six month probationary employment period, instead of a weird "consultant" arrangement?

IANAL, but most companies now avoid the term "probationary period." If you are a "probationary employee", rather than a contractor that term can imply that once you complete your "probation" that they have an obligation to offer you full-time employment. At the end of your contract, they may offer you full-time employment, offer you another contract or say "we no longer need your services" with no strings attached.

Why they don't just hire you through an employment agency? I don't know. Maybe to avoid the "mark up" cost of your hourly wage. The best thing that you can do is perform your job to the best of your ability, and continue to keep your options open for other opportunities.