What would you do? (Contractor or Employee Status)

[Sen's Revenge]

Hey folks!

Someone I know whose name rhymes with Djinn's Avenge is facing this situation and would appreciate your feedback.

Djinn has a job at a start-up org which is heavily reliant of public funding. The org hired a certain number of salaried employees, based on the number of clients the org was projected to have.

The org fell short of that goal and is now facing the economic repercussions.

Djinn and his coworkers were told last week that in order to avoid layoffs, a certain number of salaried employees (four) would have to take contract status and relinquish their benefits. They would also work 30 hours a week instead of 40.

When Djinn was sent the math, if he went contract, his take-home pay would only decrease by $25 or so per pay period, but of course he would have to put money to the side to pay taxes. He'd also lose his health insurance (currently fully funded by the org) and would have to pay out of pocket for that, or risk not having any.

His circle is aware that he is looking to move on to another, more stable position. He has about six or seven applications in elsewhere and has a phone interview tomorrow.

Djinn has no children or pets and no spouse. He gets a bad cold at least once a year and was earlier this year out for about a month with an acute respiratory illness.

If you were Djinn, would you opt to go contract or would you remain an employee and hope that four other people went contract?

[FSUZeta]

I would remain employee because due to the affordable care act, insurance rates are sky high, and as he is required to have insurance, he would be paying a big chunk of change directly out of his pocket.

[Kevin]

I think the ethical thing to do here, considering Djinn is already looking elsewhere and will likely land in that elsewhere soon, would be to take the contract money. Djinn might also explore the benefits of forming an LLC to be paid through and what additional tax advantages might apply to his situation as a contract employee. Those who remain will remember the way he graciously bowed out and perhaps that kindness will be repaid at some point.

[DubaiSis]

I would keep the full employment. If the company isn't meeting their goals there is a possibility they would continue to decline. The contract workers are the ones who would go first in the next round. And loyalty shmoyalty. You take care of you. Take the money, keep looking and jump ship at the first opportunity that exceeds the current one. The only way to move up is to keep moving.

[Sen's Revenge]

Originally Posted by FSUZeta

I would remain employee because due to the affordable care act, insurance rates are sky high, and as he is required to have insurance, he would be paying a big chunk of change directly out of his pocket.

That's a very good point. Djinn has put an email into his insurance broker to get a price quote on health insurance if he is paying out of pocket.

Originally Posted by Kevin

I think the ethical thing to do here, considering Djinn is already looking elsewhere and will likely land in that elsewhere soon, would be to take the contract money. Djinn might also explore the benefits of forming an LLC to be paid through and what additional tax advantages might apply to his situation as a contract employee. Those who remain will remember the way he graciously bowed out and perhaps that kindness will be repaid at some point.

Djinn agrees with you. He is highly employable and some orgs are interested in speaking with him for the 2018-19 term. He is also handsome. Very, very handsome.

What kind of lawyer should Djinn seek out to help him with establishing an LLC? Does it even take a lawyer's help?

Originally Posted by DubaiSis

I would keep the full employment. If the company isn't meeting their goals there is a possibility they would continue to decline. The contract workers are the ones who would go first in the next round. And loyalty shmoyalty. You take care of you. Take the money, keep looking and jump ship at the first opportunity that exceeds the current one. The only way to move up is to keep moving.

Djinn knows that the decline of the org is a certainty, but believes that others would be axed before contractors. (He is a betting man.)

Djinn agrees with you otherwise and appreciates the advice.

Thanks everyone!

[Kevin]

Originally Posted by Sen's Revenge

Djinn agrees with you. He is highly employable and some orgs are interested in speaking with him for the 2018-19 term. He is also handsome. Very, very handsome.

What kind of lawyer should Djinn seek out to help him with establishing an LLC? Does it even take a lawyer's help?

Any lawyer or probably a CPA who offers free consultations would be a good bet. YMMV from state to state to district as to whether this would have any advantage at all. If nothing else though, I think having an S Corp makes tax filing just a little bit cleaner and can make some deductions more defensible. If there is some advantage to this, there are perfectly decent LLC formation instructions on sites like legalzoom, and if you need any help, they have perfectly good referral attorneys.

To back up my previous recommendation, it sounds like the world Djinn operates in is very small. If he has the reputation of being selfless and being a team player, that's going to pay dividends down the line.

[Sen's Revenge]

Originally Posted by Kevin

Any lawyer or probably a CPA who offers free consultations would be a good bet. YMMV from state to state to district as to whether this would have any advantage at all. If nothing else though, I think having an S Corp makes tax filing just a little bit cleaner and can make some deductions more defensible. If there is some advantage to this, there are perfectly decent LLC formation instructions on sites like legalzoom, and if you need any help, they have perfectly good referral attorneys.

To back up my previous recommendation, it sounds like the world Djinn operates in is very small. If he has the reputation of being selfless and being a team player, that's going to pay dividends down the line.

Djinn looked up how much insurance costs and it is making him rethink his entire decision.

Djinn REALLY doesn't want to have an unpaid Christmas break.

Djinn needs more time to think.

[Sister Havana]

I would stay an employee. At one of my jobs, I started as an independent contractor before I was converted to a W2 employee. Even though I was only an independent contractor for about a month and a half or so, I still took a major tax hit for that year. It was an unpleasant surprise.

Also, the employer may be illegally misclassifying the employees that are converted to contractors.

[Sen's Revenge]

Originally Posted by Sister Havana

Also, the employer may be illegally misclassifying the employees that are converted to contractors.

omg

[Sen's Revenge]

Djinn decided to take the contract, but requested that he is allowed to develop his own content for the next trimester. He had nothing to truly negotiate with, obvi, but he really wanted to try.

Djinn is coincidentally a teacher, btw

[HQWest]

Originally Posted by Sen's Revenge

Djinn decided to take the contract, but requested that he is allowed to develop his own content for the next trimester. He had nothing to truly negotiate with, obvi, but he really wanted to try.

Djinn is coincidentally a teacher, btw

Djinn needs to stay salaried and on the job hunt.
If things go bad to worse and company goes belly up - the contract employees may not get paid at all?

[Sen's Revenge]

UPDATE:

Djinn took the contract, as did Djinn's coworker, who is not an instructor. They were the only two that volunteered, so leadership approached two more instructors to take the contract or be fired outright. They took contracts.

Djinn was banking on one of several job opportunities coming through, as he had been actively interviewing for the past few weeks.

At noon today, Djinn got a job offer from another school. It is less pay, but not considerably, and of course he gets benefits! Yay health care!

His last day at the current job is Friday. He starts his new job Monday. He will work a few weeks and go right into a paid Christmas vacation!

Djinn appreciates your advice and your support. He is a very happy genie.

[AGDee]

Djinn- if you ever want to consider teaching for decent money, the Detroit area is really really hurting for teachers and the shortage is expected to grow. Just sayin. Teachers are paid a lot more here than a lot of other states. I think you'd like the vibe of the new Detroit too.

I'm glad things worked out for you this time!

[Sen's Revenge]

Originally Posted by AGDee

Djinn- if you ever want to consider teaching for decent money, the Detroit area is really really hurting for teachers and the shortage is expected to grow. Just sayin. Teachers are paid a lot more here than a lot of other states. I think you'd like the vibe of the new Detroit too.

I'm glad things worked out for you this time!

I hear you--thanks for thinking of me. I really liked Detroit when I visited, but I don't think it's a full-time love affair. :-)

[Sen's Revenge]

MAJOR UPDATE GUYS:

Today was Djinn's last day--yay!

And they also fired Djinn's two best friends at the school. One had volunteered to become a contractor. The other was forced to become one. (Unsure about another person, who was out today)

This is the worst shit Djinn has ever seen.