They can get away with it because no one turns them - into the IRS

If you read the boards or look closely at the position descriptions, about 90% of independent contractor jobs are not IC as defined by the IRS.  But if they pay okay and do not fire anyone, no one complains.  Problem is, if the IRS ever does get wind of what they are doing and how they are cheating, both the employer and the MT will be in a world of hurt.  The employee probably would not be in any legal trouble, but it takes months to sort out the financial part before the IRS is satisfied.  That is why no one wants to turn the company in.  If they have worked for the company for any length of time, they are afraid of what will happen to them personally.  The only way to get these companies to stop taking advantage of IC MTs is for no one to apply or take a job as an IC unless the company agrees to the IC IRS requirements. 

True IC - kimmie

Basically, if the Company dictates the terms about hours and production - you are an Employee and not a true IC

 Basically, if the company has any say, including what hours, days, or how many hours the person works, they are not Independent Contractors – they are employees, and thus, the company is required to pay 1-1/2 for overtime over 8 hours a day or 40 hours a week.  Benefits are just that – benefits – and no company is required to offer those.  But it is a Federal Law about minimum wage and overtime pay.    Also, employees are entitled to Unemployment Benefits if they are fired, laid off, or have no work so that they fall below minimum wage. 

 Below are the IRS guidelines for IC versus employee. 

 “In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered…

 Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?


2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)


3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

 Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.

The factors, for the type of relationship between two parties, generally fall into the categories of:

• Written contracts


• Employee benefits


• Permanency of the relationship


• Services provided as key activity of the business

 Written Contracts

Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker’s status.  The IRS is not required to follow a contract stating that the worker is an independent contractor, responsible for paying his or her own self employment tax.  How the parties work together determines whether the worker is an employee or an independent contractor.

 Employee Benefits

Employee benefits include things like insurance, pension plans, paid vacation, sick days, and disability insurance.  Businesses generally do not grant these benefits to independent contractors.  However, the lack of these types of benefits does not necessarily mean the worker is an independent contractor.

 Permanency of the Relationship

If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.

 Services Provided as Key Activity of the Business

If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities.  This would indicate an employer-employee relationship.”

 In other words, the major differences are: 

 A “true IC” tells the Company what hours, how many hours, what days, and how much they will produce (for example:  “I will type 60 minutes of dictation and return it to you within 24 hours in a midnight to midnight day, 3 days a week” – so whether they transcribe at midnight, 8 am, noon, or 6 pm on Monday, Thursday, and Sunday or any other time or any other day, as long as they transcribe 60 minutes a day times 3 days, they are within their contract).  So basically, if the Company says – “You WILL work 8 am to 5 pm, Monday through Friday and you MUST produce 1200 lines per day” – you are an EMPLOYEE, not a “true IC.”

 A “true IC” will bid on the job by telling the Company how much they “charge” (for example:  “I charge 10 cents per line for straight typing, 12 cents per line for ESL, and 6 cents per line for editing” – the Company does not tell the IC what they will pay them.  The Company can, of course, negotiate or list in their job post what is the maximum they will pay so that the IC knows whether to apply for the job or not, but an IC always has the option to negotiate for more just like the Company negotiates with the hospital/clinic). 

IC versus employee - MT17