Independent Contractor Or Employee?

[Eli]

Please vote. Multiple choices are allowed. 4 to be exact if I did the survey right. The survey is anonymous.

 

[Randolph Kinney]

When I was coming in as a trainee in 2002, I was a 1099 contractor. Times have changed, however. California and the federal government want their payroll taxes.

 

[Terrel L. Shields]

I came in as an independent contractor because there is and never was a requirement that I "train" under anyone. I worked with some people and some co-signed my reports, but to the best of my memory, I never accepted a single assignment from another appraiser. I obtained the work and then engaged the "supervisor" (an ill-conceived descriptor) to review and co-sign my work. I realize that today that isn't a practical business model under the current restraints of regulatory over-reach, but again, what law says you cannot learn appraising without a supervisor?

 

[hastalavista]

When I had trainees I hired them as employees and paid all the necessary taxes.
That is the law.

 

[Mike Garrett RAA]

There was short period of time when I was considered an employee as I was the "staff" FHA appraiser. Funny thing was they paid me as if I was an independent contractor. Go figure?

 

[Elliott]

AMCs put more demands on me than any employer ever did and of course they demand that I'm not an employee. Silly area of tax law because of social security.

 

[Michael S]

I'm surprised at the number of independent contractor trainees - currently at 75% of responses. Frankly I don't see how you could comply with both IRS and state appraisal regulations/laws and be a trainee independent contractor. Either you're being directly supervised and trained which means you should be classified as an employee, or you're not being directly supervised and trained which means you're violating state appraisal regulations/laws.

 

[Eli]

I'm surprised at the number of independent contractor trainees - currently at 75% of responses. Frankly I don't see how you could comply with both IRS and state appraisal regulations/laws and be a trainee independent contractor. Either you're being directly supervised and trained which means you should be classified as an employee, or you're not being directly supervised and trained which means you're violating state appraisal regulations/laws.

Well, let me tell you that you are not aware of the real world. How long have you been around? Just curious. It may make a difference along with many other factors. I may need another survey relating IC vs employee depending on when you were a trainee or other factors. Maybe somebody else will do it for me. I don't want to be the survey leader.

 

[hastalavista]

I'm surprised at the number of independent contractor trainees - currently at 75% of responses. Frankly I don't see how you could comply with both IRS and state appraisal regulations/laws and be a trainee independent contractor.

This is easy to answer: One cannot comply with the IRS regulations if they are paying an appraiser-trainee as a contractor.
I was audited: My business. They went back several years (IRS and State). I ended up owing the state $17 dollars and the IRS said I didn't owe them anything. The first thing they looked for was to verify if I had any trainees and if I did, was I paying them as a contractor or employee.

I had a trainee more than 10-years ago that I had to let go. She filed for unemployment benefits (her right). I challenged it on the basis that the reason I let her go is because she hadn't mastered the basic level of appraisal competency. When the Administrative Judge asked wasn't my job as a supervisor to instruct her, I answered that it was my responsibility that I train her in the practical application of appraisal methodology but I was not qualified to train her in the basic core concepts. When I let her go, I said (and told the judge the same thing) that if she went back and re-took the basic principles class, I'd be happy to re-hire her and begin the training again. Indeed, I said that it was my responsibility to ensure that she complete her training and experience as a competent appraiser, and right now she wasn't (this wasn't being mean; she admitted as much).
The judge said that wasn't good enough; that I should continue to employ her in some other role while she went back to re-educate herself. I said I had no other employment role. The judge said, then she gets unemployment and it is charged to your account. Next!

Had I not hired her as an employee, I would have been toast when she filed for unemployment.
In California, employers also pay worker's comp premiums. Not only would I have been financially responsible for a trainee if hired as an independent contractor for any injuries, I would have felt like a heel if anything bad had happened.

From the supervisor/trainer's perspective, hiring a trainee as a contractor is like playing with fire. The reason my audit started had nothing to do with any irregularities; I had an appraiser who I hired as an employee (she was fully licensed) decide she wanted to go as an independent contractor. I had no problem with that, encourage that she get her own clientele and continued to provide her work if she wanted. She was in a nasty divorce, and when her EX saw the change in status, he accused her of trying to hide the income. He filed a complaint with my state's tax agency saying that my firm was illegally paying her cash to hide the income. They monitored my reporting for 3-years after that complaint (unbeknownst to me) and then with 3-years of data, they came in and gave me the 3rd degree. Then, they hand me a tax bill for $17.
So, even if the trainee is the supervisor's best friend, things can go south and in a big way.

As a trainee, it puts oneself in a tough spot. But if one were to get injured on the job (and assuming the state has a worker's compensation program), the trainee has two choices: File for the injury and the supervisor will get nailed, or don't, and figure out how to pay for the injury on your own. In my situation, all the former employees I had hired were interviewed by the auditor. Some called me before they spoke and asked me what they should do; I told them to answer the questions truthfully because I followed all the rules; and they did. But if you are a trainee, and you get a call from an auditor/investigator, and they ask about your supervisor (who you may be best friends with), what kind of position will that put you in? I'll tell you right now, it will put you in a very awkward position.

I cannot think of a more risky position in our profession to be in than a certified appraiser who hires a trainee as a contractor.

 

[Eli]

There have been so many trainees abused and I hate it. I am glad those days appear to be over !!