Contracting and Temps Replies

Subject: Contracting and Temps Replies
From: "Tommy Green" <tom -dot- green -at- iwon -dot- com>
To: "TECHWR-L" <techwr-l -at- lists -dot- raycomm -dot- com>
Date: Thu, 3 May 2001 16:29:12 -0500

Thank you VERY much everyone for your timely, and helpful advice onthis
matter. Due to time constraints (need the job), I chose tocontact a temp
agency they recommended and am negotiating with them. I have learnedthe
advantages and am still aware of the disadvantages of using anagency and
will be very cautious while treading this new water. In themeantime, I
will be working on totally independency (I hope) very soon. Here areyour
replies

Hi Tommy -- I worked as a contractor for a year and neverexperienced this,
but a number of my contracts were through agencies.
The National Writers Union (www.nwu.org) offers information aboutinsurance
and other issues. You might want to check out their web site.
Good luck!
Jessica Meltzer

>From the employer's point-of-view it goes beyond just insurance. Italso
has to do with the IRS interpretation of who is a contract employee or areal
employee of a firm (i.e withholding, workman's comp, benefits etc).
Even if you incorporated your business, purchased insurance and madeit look
like you were a temp agency, it still may not work if you were theonly employee
available for hire. I'm not a lawyer but hope this helps.

Avery Russell Washington, DC

Temp agencies are not a problem. Go for it!

Don Kobes

I got a very similar explanation when my former employer wanted meto do
some contract moonlight work. They didn't want to pay me on a 1099,claiming
some story about my needing to have "workmans comp" insurance andthey didn't
want to get in trouble with the Feds, etc.

Instead, they wanted to pay me as a "part-time" employee at anhourly rate
lower than my contract rate...I said thanks, but no thanks.

I too would be interested in what this "insurance" thing is allabout.

Donn Le Vie Intel

You should be able to get insurance through the same company that provides
your home insurance. Give your broker a call.

Clarify with the company that what they want is errors and omissions insurance,
or simply a contractor's package. (There is a difference in price.) If
the deal with the company is they will review all work you submit for accuracy,
then contactor's may be enough.

Note: It is *not* the same as workers' compensation--at least it isn't in
my part of the world. Some kind of contractor's or errors and omissions
insurance is different from WCB. Also, depending onhow your local WCB people
work, you may be able to get the company youare working for to cover that.
(As a related aside, up here, you can be considered self employed by the
tax people for tax purposes, and considered an employee by the WCB people
for workers' comp. So you might want to check into that.)

Both are different, to my understanding anyway, from being bonded.

John Fleming

The insurance they refer to is probably errors and omissionsinsurance.
This allows them to recover any damages they suffer as a result of yourwork.
You can get this coverage through your home owners, although manyinsurance
vendors require you to have all of your insurance (home owners, car)with
them in order to add the umbrella coverage. I pay less than $300 ayear
for $3m coverage.

There are also a number of sites on the web, such as ework.com, freeagent.com,
and others who will act as employer of record andmake it possible to get
group rates for insurance and will handle all of the financial site of things,
such as invoicing, taxes, and such. Theytake a percentage of gross as a
fee, but they do not charge the ratescharged by an agency who is also in
the business of sourcing talent. This alsomeans you free up hours you would
have spent on bookkeeping for billable work.

If you want to freelance and protect your personal assets, you haveto get
insurance coverage. If you do not, you face the possibility oflosing everything
of value you own. I do not think that risk is worth it.

Mary Deaton Deaton Information Design News and opinion at: http://www.mmdeaton.com

Canada Customs and Revenue Agency has a similar interpretation ofwhat is
an employer / employee relationship and what is a company / contractor relationship

Up here they have a set of guidelines or tests that they use togauge whether
an employer / employee or a company / contractorrelationship exists. The
IRS has, I believe a similar list they use.

The tests cover things like degree of control, risk of loss,ownership of
tools, and reliance of the contractor / employee on a singlesource of income.

Generally, contractors exercise a high degree of control over where, when
and how work gets done. Employees do not. Contractors run the risk of
not getting paid, or not getting paid enough to coverbusiness expenses.
Employees do not. Contractors supply their own tools--computers, software,
office equipment, etc. Employees do not.
Contractors will have a number of clients, each providing some ofthe contractor's
income. And loss of any one client would notnecessarily jeopardize the
financial security. Employees generally rely on one, perhaps two or three,
employees for income, and loss of employment could place the employee under
a significant amount of financial hardship.

Now CCRA uses these tests as guidelines, not absolutes. They keep in mind
things that are normal for an industry and field. I suspect IRS probably
does the same thing.

My understanding is the whole idea of these tests came out back when mass
downsizings were popular. And companies got into the habit of "firing"
employees and "contracting" them back. The former employee would work regular
office hours at the company, using the same desk, same telephone, same secretary,
same photocopier, etc. The only differences were that employers didn't
have to pay as many benefits, and the former employee got to do all the
paperwork and do all thetax deductions.

Well, there you have it. Thank you very much and keep writing

Tom Green









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