"1099 employees" Legal or Illegal?

Discussion in 'Florida Lawn Care Forum' started by LGL, Aug 20, 2012.

  1. Sam75

    Sam75 LawnSite Member
    Messages: 30

    You and I don't have the legal staff or money to fight like Fed Ex however your point is a good one:

    In 2007, FedEx agreed to pay $26.8 million to settle a decade-long class action lawsuit with 203 drivers who claimed they were misclassified as independent contractors.


    To give you an idea of the scope of litigation FedEx Ground is facing, one of these class action lawsuits represents an estimated 27,000 current and former ground-delivery drivers who are seeking nearly $1 billion in damages for back pay, truck purchases, overtime and costs they incurred as contractors, according to a Bloomberg news report.

    Fedex Ground hasn’t waited for the courts to produce a final answer. In the seven years since the first lawsuit raised the issue of contractor or employee, the company’s methods have changed - prompted by the lawsuits and its growth. Today, many more of its contractors operate multiple delivery routes, and fewer are single-route drivers. “There is a big difference in the numbers,” said spokesman Bryan Iams. Specific numbers were not available, he said.

    Now, every FedEx Ground contractor is required to be incorporated as a small business, treat its drivers as employees, secure workers compensation coverage and unemployment insurance for them, among other requirments, Iams said.

    full article:

    We can do this in our industry also but why? If my crew does all the work and I am basically a franchise of your company why not cut you out and keep my own route.

    Speaking of franchises
    The court ruled last fall that the Boca Raton, Fla.-based franchisor must pay back the franchise fees over 100 people — mostly new immigrants — paid the company, plus interest and lawsuit costs. The court’s opinion? Privately held Coverall misclassified its employees as franchisees, so their fees should be refunded.


    Fed ex is a nationwide system of moving packages with a huge but simple business model. When they drop off a package the client never says by the way can you transplant that bush today? Microsoft also had a similar IC problem and they also settled.

    The real question: Is the risk worth it anymore. 10 years "yes"! 20 years ago "yes" Today "not really".

    This is one topic that really got my interest a few years back when a lawyer said as long as it is an industry standard practice you are safe. I asked him How would I prove that it is. He said well just ask some of your other business owners to come in a prove they do it also.
    So the other question is will you open your books to the IRS to help a friend out? Well the other owners I talked to probably said probably not.

    By the way I am not a lawyer or CPA I own a landscape company just like you. Mid size, 23 employees I have been in business over twenty years. I always look for new and interesting this to learn about, this certainly is a hot topic in the service industry.
    Over the last 3 years it has been more of the legal side of the business that really intrigues me. 3 years ago a rash of FLSA lawsuits against local landscaping companies came through our area which was the start of my newest hobby. 3 years ago you could barely find anything on this topic. By the way most FLSA cases involve a set weekly or day rate amount, with no over time like an independent contractor status.
    Winter is about to start in Chicago so if anyone else has any thoughts on this topic please share them thanks and have a great holiday.
  2. Ric

    Ric LawnSite Fanatic
    Messages: 11,969


    Here in Florida we have a huge Law Firm that advertise heavy "DOES YOUR EMPLOYEER PAY YOU OVER TIME". Their motto sounds like "Screw the People" to me. But the point here is casual Labor could ruin you with one phone call to these leaches of society. Their lower than Wale Crap morals laugh all the way to the bank.

    I have been there and done the close to 20 employees before Hurricane Charlie blew away my Nursery. I also paid a huge Worker Comp fine one time for not having the correct Insurance. Today I have peace of mind as a one man band. Now I try and stay as far under the radar as possible by being legal on paper. Few cash sales don't count any how.

  3. Sam75

    Sam75 LawnSite Member
    Messages: 30

    We have the same ads here but it called the farm worker advocacy project. It is basically a referral service. They go out to nurseries and job site and ask things like does your employer deduct for uniforms You have to have a signature each year not just one from 3 years ago ( one landscaper had to pay 60000.00 in a settlement case over a signature for uniform deductions). Overtime which you cannot prove if they clocked out and even left the property they can say they were at work for 1/2 an hour each day and you never paid them unless you have cameras that prove different.

    By the way we have cameras and keep copies for 3 years to avoid this problem. it is a long list of lawsuit possibilities. they refer the workers to a lawyer they lawyer sues the employer. the lawyer after collection donates a portion to the farm worker advocacy project. completely legal but it just doesn't make sense to me.
    When I was younger and I was treated fairly I stayed where I worked if I felt I was being treated unfairly I first spoke to my boss if I couldn't work it out I left and got a different job.
    And yes there are jobs out there. I offered my old boss when I was 19, try me for a week if I am not worth the money don't pay me the week is free to you. But if you like my performance Pay me for the week, hire me and promote me when you see me adding value to your business. I always succeed where I worked and was always promoted. If anyone can help make a company more efficient and more profitable why would you fire that person? That is what makes small business grow and succeed.

    I still do that today some clients ask me will this kill my weeds? Of course Ill tell you what don't pay me until you see improvement in your lawn if you think I did a good job pay me. If you think my work isn't worth the money call me and tell me and its free. Within 30 days 99.9% of the time I get paid.

    This is a service industry you only grow as good as you are

    Have great night everyone
  4. Tablandscaping

    Tablandscaping LawnSite Member
    Messages: 9

    Yep, its definitely illegal. I worked for a guy that gave his employees 1099's. He must have "covered" himself by saying at the interview he didn't take out taxes. I never thought anything about it, no big deal I thought. Come to find out at tax time I'm getting taxed more because of it since I have to pay his share in my SE Tax.

    Not to mention he didn't have workmans comp, so when someone got hurt he was in a real tissy. I imagine he also claimed our payroll as a business expense since we were considered contractors. Once I found out what he was doing, I felt real cheap and cheated, and my desire to work for him crashed and burned. I am now starting my own business and will run it the right way. All of you bosses out there, treat your employees well and they will keep working for you and do a good job. This guy always wondered why his good help quit.

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