The Employee or Independent Contractor Scam

By Jack Payne

You've got some spare hours and want to earn some extra income. You get an offer to become an "Executive Assistant" in an aluminum siding company. You visit their representative, and look over their literature, handsome colored brochures which proclaim opportunity, opportunity, and more opportunity. But, nowhere are benefit packages mentioned, the usual, medical, vacation, sick leave, termination pay--nothing of this in writing. But, the rep speaks lavishly of these "benefits." You are impressed, join the team, find you are only to collect commissions for selling aluminum siding, work a few weeks, get disgusted and quit.

When you go back to collect your pay, you are told that you were never an employee, but an independent contractor, and delay excuses are made for not having your limited earnings available yet. You wait. Next time you try to contact them, you find the tent has been pulled and the company is gone. This is a pattern that is practiced repeatedly, and with much success, by con men everywhere.

Why this pattern?

Because it enables them "cover," a means by which they can hide behind an advantage to them, a differentiation problem that the politicians are too cowardly to solve.

Congress has punted on this due to the difficulty of precise language and because, generally, employers everywhere want to keep the language vague so as to give them more maneuvering room in taking on additional help. These companies assert lobbying pressure against precise language. Some states have laws, but mostly subject to interpretation all over the map. End result? You are caught in the middle.

Only the IRS has rules covering this debate, the exact nature of which are unknown, but as a general rule run something along this line:

To qualify for independent contractor status a company must not provide any tools to work with. Example: when you call a plumber to come fix your sink, he brings his own pipe wrench. You do not provide this for him. You can only supply merchandise which will be used up in the process of the job, e.g. tissues to wipe down the plumber's tools while he is working. The company may not specify work hours. That must be left up to the independent contractor, like the plumber. No other form of guidance may be exercised. You, as the customer, have engaged the plumber to attain a desired result, a workable sink, that's all. The means of getting this desired result must be left up to him. And, importantly, the independent contractor must not be provided work facilities on a regular basis. This is yet another separation criteria in determining, is this person an employee or an independent contractor? To top off: an independent contractor submits invoices for services (he works for others beside you). And, employees do not submit invoices.

So how do you protect yourself against these charlatans?

Ask them to write down the work "benefits" they offer, maybe because you wish to ponder them, and / or, talk them over with family and friends.

Have them clarify, in writing, the status of an "Executive Assistant" as opposed to Sales Representative.

Ask for a list of references from satisfied customers. Ask for bank references.

You won't have to go much further than this. If these simple requests are filled for you, this opportunity might be worth further pursuit.

If not, well, you've saved yourself a lot of time, effort. And, needless frustration.

Jack Payne is the author of the legal thriller, Six Hours Past Thursday, a fictional book about real legal scams. For more information visit

0 Discussion: