Re: W-2 vs 1099

Subject: Re: W-2 vs 1099
From: "Gene Kim-Eng" <techwr -at- genek -dot- com>
To: <techwr-l -at- lists -dot- techwr-l -dot- com>
Date: Thu, 21 Feb 2008 12:47:22 -0800

Unless you have the unusual situation of negotiating
directly with a client company's CEO, any "negotiation"
is subject to approval by someone higher up than the
person you've been talking to. We don't know the
full details of OP's discussions with the client, but if
the 1099 news was delivered by a recruiter, my guess
is that when the OP says "I negotiated," what that really
means is "I gave the recruiter and/or interviewers the
terms under which I'd take the job and they decided
that it would not be a total waste of time to take it to
management for approval." The next step is for the
OP to consider the implications of going 1099 vs W2
at the "negotiated" rate and either accept the latest
revision of the offer, turn it down or counter with
additional terms. No negotiation is "complete" until
both sides have agreed on all the terms.

As for 1099 rates being "double the W2 rate," the
"double" figure often tossed about is comparing
the employer costs for a 1099 contractor to hiring
a fulltime direct W2 employee with full benefits.
The difference between a 1099 contractor and a
W2 temp with no bennies is the employer's portion
of Social Security, state/local payroll taxes and
sdi/workmen's comp, unemployment and any
other mandated coverages. About 8-12%,
depending on location.

Gene Kim-Eng



----- Original Message -----
From: "Al Geist" <al -dot- geist -at- geistassociates -dot- com>
> Well said, except, the OP said the rate was negotiated based on W-2,
> but was
> changed to 1099 after the W-2 rate was given. In most cases, the 1099
> rate
> comes out to be nearly double the W-2 rate when you figure in all the
> additional costs that the contractor must bear. However, this is not
> always
> true and, as Gene says, it depends on the W-2 rate that was negotiated
> previously. I think the real problem with the OP is not knowing that
> the
> "negotiated" rate would be 1099 versus W-2. We were told that the
> recruiter
> didn't make that statement until after payment negotiations were
> complete.
> We were not involved in the negotiations, so we have to take the OP's
> word
> for that; however, one of the first things I clarify in any contract
> negotiation is what rate are they looking for....1099 or W-2. It keeps
> these
> types of problems from popping up in inopportune times.

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Follow-Ups:

References:
W-2 vs 1099: From: R D
Re: W-2 vs 1099: From: Ed Wurster
RE: W-2 vs 1099: From: Dori Green
RE: W-2 vs 1099: From: Al Geist
Re: W-2 vs 1099: From: Patricia Egan
Re: W-2 vs 1099: From: Gene Kim-Eng
RE: W-2 vs 1099: From: Al Geist

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