I was talking to a relative over the weekend who was, for all intents and purposes, an employee of a firm. Everything in his relationship with the company he worked for was employer-employee in nature. But, the company told him he would have to be a freelancer and bill the company for his time even though the company was his only "client", and they completely directed his activities.

A few years ago, when I lived in Toronto, I worked for an organization as an administrative assistant/receptionist. I went to an interview and it was a position. It was full-time, and I had a boss and a supervisor. But when I was called and offered the job after passing the interview, I was told that I would have to incorporate myself and be a freelancer. And BTW, this place that I worked for - most of their employees were unionized in other branches of the organization, but in the branch I was in, most of the people were "independent contractors". I needed the job so I took it on those terms, and after about 6 months, there was a window of opportunity for me to get on payroll as an employee. But as far as I was concerned, I should have been an employee all along.

I know a couple of other people who are employed by organizations and companies. Their relationship is completely employer-employee. But their employer makes them bill the company as freelancers instead of putting them on payroll.

And the reason is obvious: IT'S A BIG FUCKING TAX EVASION SCAM. Do I sound angry? I am.

Not only because of the evasion of payroll taxes. But these people who work full-time, sometimes for years, have no protections. They can be fired at any time. No labour law protection. And no EI if they lose the work.

Furthermore, as an independent contractor, if the person who pays you is late with your paycheque (which, of course, isn't a paycheque, but a bill payment), they have up to 90 days before you can take legal action, if I'm correct. How many of you can go 90 days without being paid? That's the situation my relative was in with his employer, er, I mean, CLIENT, which is why he had to quit and find something else. And no EI in the meantime, of course.

I want to see a clampdown on this kind of bullshit. I want to see companies and organizations (and don't kid yourself - it's not just evil corporations that do this, but community groups, lefty organizations, and non-profits that do it as well, and in fact, I see it a lot more in the non-profit sector than with large companies, which generally have benefit plans and large payrolls) that pull this kind of crap leaned on big time. Employers shouldn't be allowed to evade their responsibilities towards people with whom they have, in every other way, an employer-employee relationship.

The thing is, Michelle: our entire economy has been headed in this direction since the late 1980s. I and a whole lot of craftworkers I knew and worked with were "outsourced" way back then, at a time when that word hadn't even been invented yet. But the pressures were on; our employers were responding to them, however stupidly; and that logic has simply intensified since then.

Freelance. Contact worker. The harsh old term was "piece-worker," but middle-class people shy away from blunt language like that, even when grasping for the prettier language simply means that they co-operate in their own exploitation.

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And the reason is obvious: IT'S A BIG FUCKING TAX EVASION SCAM.

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I want to see a clampdown on this kind of bullshit.

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For what it's worth, Revenue Canada is interested in hearing from people screwed over in this way.

The DMM was working for a small company in Vancouver which was not only working this scam, but -- predictably -- treated its employees like ratshit. So when she finally got a decent job elsewhere, she rang up Revenue Canada and told them what was going on. They were most intrigued and asked her for plenty of details.

I know there are some industries where people are self-employed and that's just kind of the way it is due to the nature of the work.

But there are people who are employees. They have to go to their employer's office every day. They are directly supervised by their boss in the company or organization. They do not have an independent direction they can take their work, and often do not work independently. They do not have other clients, and due to the nature of their work, really couldn't have other clients (e.g. a full-time secretary). But the organization still pretends they're contractors.

It's also illegal, apparently. I read government literature at one point (maybe from the Ministry of Labour?) that said that if certain criteria are satisfied, then a person is an employee, not self-employed, and therefore must be on payroll and have payroll taxes deducted, and the employer must pay their share of the employee's CPP and EI premiums. But it's so often evaded.

And the government looks the other way. You know why? They encourage this bullshit. Go to an EI introductory session sometime, where they talk about "Me Inc." and how each person should look at themselves as an individual business, and how each person is responsible for their own safety net, that the days of responsible employers are over, etc.

They're over, all right. But not because they have to be. There CAN be proper labour laws, properly ENFORCED. There can be governments who make employment - proper employment - a priority, and not make it easy for companies and organizations to fuck over their employees.

And I would also like to say this: the first thing progressives should examine are their own organizations and see what they're contributing to this. I know that this is vague. But as I said above, I've seen a lot more of this "employee as independent contractor" bullshit in the non-profit and charitable sector than I have in large corporations. I think it's time to start demanding that employers clean up their act on this issue. And that includes progressive employers that that we would otherwise support.

[Edited to say: 'lance said a lot of what I did - I didn't see his post until I'd finished composing this one.]

[ 30 August 2004: Message edited by: Michelle ]

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I know there are some industries where people are self-employed and that's just kind of the way it is due to the nature of the work.

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Actually, no. It is not "due to the nature of the work." It is due to the same damn immorality of the employers.

If RevCan (insert new name) is willing to pursue this only in the name of people who actually go into an office and are subjected to the certain conditions Michelle refers to above, well, that is a step in the right direction, but it doesn't really address the massive shift in employment conditions that has occurred since the late eighties.

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Still, if more "freelancers" were aware they could put the boot in when they leave, and more companies were aware of that...

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I wasn't just talking about office workers - I was just using that as an example because it was the most blatantly incongruous example of an "independent contractor" that I could find - a person who has absolutely no power and no authority and no autonomy in their work, or even in the place where they do their work, and yet being considered a "freelancer".

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Originally posted by DownTheRoad:
Which is why most companies will no longer hire "contractors" directly, but instead go through temp agencies.

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However...at least when you work for a temp agency (which I have a lot of experience doing), you are an employee of the temp agency, and therefore have tax deductions taken from your paycheque, and your employer pays their share of your CPP and EI. At least you're SOMEONE'S employee, if not the employee of the company on whose premises you're doing the work.

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Ramifications; well, say a "contractor", rather than paying income taxes; fills out her tax return stating she was an "employee". Revenue Canada (or whatever it is now called) will immediately go after the employer for taxes that ought to have been withheld and submitted. The onus is on the assessed employer to prove the "contractor" relationship. Frankly, I don't like their odds in most cases.

A recent example; one that may not be for the better. Symphony orchestras have traditionally viewed their musicians as contractors. It let the symphonies, most of which are suffering budget woes to escape payroll taxes; and it also allowed the musicians to deduct instrument purchace and maintenance costs, travel, part of their residences as practice studio space, etc.

Several years back, I was working in a unionized environment. The union, upset at the number of contractors, called in Revenue Canada (at that time) to deal with the issue. Rev Can came in, found that there were problems with the use of contractors and levied a fine. But, at the same time, they did an audit and found that some of the perks the employees were getting (e.g. parking) were actually taxable benefits and some of the deductions employees were taking weren't allowable. Result: both sides lost and RevCan won.

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Originally posted by Michelle:
I know a couple of other people who are employed by organizations and companies. Their relationship is completely employer-employee. But their employer makes them bill the company as freelancers instead of putting them on payroll.

And the reason is obvious: IT'S A BIG FUCKING TAX EVASION SCAM. Do I sound angry? I am.

Not only because of the evasion of payroll taxes. But these people who work full-time, sometimes for years, have no protections. They can be fired at any time. No labour law protection. And no EI if they lose the work.

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I find it rather ironic that now you are just as full of outrage about the proliferation of "independent self-employed" as I have been for years, considering you took the opposite part when I pointed out that one of the ways corporations grease up the skids to scam the feds and screw their worker.. ah, contractors is by subtly pointing out all the ways that the worker... ah, contractors can abuse the tax system by padding out their write-offs and by taking advantage of deductions not offered to workers at all, such as the depreciation of a person's vehicle from manufacturer retail when it was new (which you claim helped your then-husband when he was work.. ah, contracting for whoever).

In any case, it is a scam, and is designed to put all the risk on those least able to handle it, which is the worker, disguised as a contractor. The company doesn't even have to give any notice of layoff or termination of employment whatsoever, and the Ministry of Labour has no legal power in this respect.

-vehicle costs (needed for employment). Yes, the big new truck, not necessarily the little puddlejumper
-home office costs (in other words, a part of your rent or maybe the interest on your mortgage)
-telephone costs (phone bill)
-internet costs
-stationary etc.

Given the significantly increased instability of freelance work, I don't begrudge people their writeoffs. However, there is significant room for abuse. I knew a lot of fishermen who wrote off 60K trucks as their 'work vehicles' because they used them to get to the boat (2 blocks away). Similarly, they wrote off 'home offices' as a work expense, though, not surprisingly, little fishing happens at home.

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It is possible to collect EI after being a 'contractor', but it means you have to pay the entirety of your EI premiums while working (not just the employee half).

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If you are paid as an employee of a business and you own more than 40% of that business, you cannot draw EI for that salary. However, you aren't required to pay the premiums either. If you employ an immediate family member for a business that you control 40% or more of, then they cannot collect EI either. They are not required in that case to pay it.

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-home office costs (in other words, a part of your rent or maybe the interest on your mortgage)

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Big risk there. If you cannot prove that a certain percentage of your house is used exclusively for business, the expense will be disallowed during an audit and the CRA is REALLY PICKY about this one.

You could buy a HUMVEE though. No problem.

1. Most freelancers are small fry, as are their deductions. As such, not as much of a target. Not immune, however.

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Originally posted by skdadl:
I think of a lot of other things that are either supplied for one or that one must pay for oneself -- rent, utilities, equipment, office supplies, etc -- those are normally the big expenses for the self-employed, although obviously not for those forced into some of the faux-contract situations described above.

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Yeah, but those forced into faux-contract situations don't get the perks that people who are employees get - like, oh, say, Employment Insurance. And labour laws that protect them from arbitrary firing or unsafe work.

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-home office costs (in other words, a part of your rent or maybe the interest on your mortgage)
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Big risk there. If you cannot prove that a certain percentage of your house is used exclusively for business, the expense will be disallowed during an audit and the CRA is REALLY PICKY about this one.

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Originally posted by Michelle:
Yeah, but those forced into faux-contract situations don't get the perks that people who are employees get - like, oh, say, Employment Insurance. And labour laws that protect them from arbitrary firing or unsafe work.

And that's all I'm going to say on Doc's absolutely inane, boring, and utterly ALREADY WORKED OVER digression on tax breaks for the self-employed.

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There was no call for you to denigrate my comments with a dismissal like that, especially as you waved away my initial comments in the other thread where this first came up on the grounds that unlike the big corporation which abuses its deductions (like, gee, Hollinger?), this abuse forces the rest of us to take up the slack, similar abuse on the small scale by smaller operators does not do the same thing.

It's a difference in degree, not in kind, and someone who takes a deduction they shouldn't is, even if it's only a dollar, still taking a dollar out of the government revenue pot someone else has to make up.

Hello? I agree with you that it's a abuse of workers! What I am also saying is that I would not be surprised that one of the ways in which workers might be enticed into acting against their self-interest (that is, allowing the company to reclassify them as a contractor, with no Ministry of Labour to backstop them) is via the company telling them about "all these grrrrreat! deductions" (conveniently forgetting to explain the hassle factor if (a) the CRA disallows the contractor status on the basis of the if-it-quacks-like-a-duck-it-is-a-duck argument and forces the employer to reinstate the employee as a bona fide employee, or (b) if the CRA allows the contractor status, but disallows deductions taken because they are not properly substantiated).

[ 02 September 2004: Message edited by: DrConway ]

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1. Most freelancers are small fry, as are their deductions. As such, not as much of a target. Not immune, however.

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I guess small fry is a matter of opinion. I know lots of IT consultants who have incomes well into 6 figures. In fairness, I can't speak to their deductions.

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The construction industry is into this scam up to their eyeballs, and for the workers, it is double jeopardy. If injured, there is no Worker's Comp., because premiums haven't been paid. Most of the workers aren't even aware of this.

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I've been told (by someone who ought to know) that if an independent contractor is working on your house, you have put yourself in the position of being the employer. And if said contractor injures him/her self and has no workman's comp, they could come and see you about it.

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Originally posted by ReeferMadness:

I've been told (by someone who ought to know) that if an independent contractor is working on your house, you have put yourself in the position of being the employer. And if said contractor injures him/her self and has no workman's comp, they could come and see you about it.

Caveat emptor.

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That's how I've worked all of my adult life -- as a journalist, author, and professor.

It's a great way for a employer to get the same amount of work from you without having to make any committment to you.

But because you don't have that real connect with the company, they don't as much out of you as they could if they put something more on the line. They think they're saving a few pennies, but it costs them in the long run. The turnover is higher, and you don't have people have the same knowledge and wisdom; so things suffer as a result. Employees aren't close to one another, which makes true teamwork much harder to achieve. And there's always someone out of the loop, meaning breakdowns are frequent.

A respect for employees is one of the main tenets of true capitalism, yet so-called capitalists always seem to forget this little factoid...

[ 24 September 2007: Message edited by: Alexandra Kitty ]

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They think they're saving a few pennies, but it costs them in the long run. The turnover is higher, and you don't have people have the same knowledge and wisdom; so things suffer as a result. Employees aren't close to one another, which makes true teamwork much harder to achievement. And there's always someone out of the loop, meaning breakdowns are frequent.

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Originally posted by jrose:
Michelle,

It includes clauses that prohibit us from working with the competition, yet we have no "perks" that an employee would have, let alone job security.

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jrose, I understand that non compete clause are often not worth the paper they are written on, particularly in cases like these.

This thread is interesting to me- I work in a newly unionized environment. We were integrated into the corporate entity that owns us, which is how we became unionized.
We have a few employees who are on contract, and these contracts are perpetually removed. There are two scenarios:
1. The employee is for all intents permanent, but is a contracted employee and the term is up for renewal every six months.
2. The employee works for an agency who hires him out to us and takes most of the money paid for him. He has no paid holidays etcetera. He has been with us for almost two years and works for us full time, on a month to month basis.

We want to help these employees; in the latter case we are concerned that if we push to have the employee "normalized" that they will just let him go.
In the former, we feel we can push a little harder, since this person is employed directly by us.
The company appears to have a mandate to reduce headcount through attrition and thus are reluctant to increase "official" headcount. We are a crown corp.

If you are newly unionized and the "contract" workers are doing work that is the same or similar to bargaining unit work then they might in fact have the same status as all the rest of you. Depending on which province you are in they may even be covered by the freeze provisions around certifications.

It is also in our collective agreement that term employees MUST be converted to permanent employees after the third year. So, they can only keep an employee on contract for three years, and then if they still need the position filled, they not only have to give it to me, but it must be made a permanent position.

So, perhaps that sort of model should be considered by your union for your contract workers when they're doing their next round of collective bargaining with your employer.

As for your second case - basically, that person is a temp and their employer is the temporary agency, not your employer. As a veteran temp, I sympathize, but I can't see what you could do about it. As far as I know, most employers, even with unionized workplaces, use temps, including governments. I suppose your union could try to negotiate time limits on temps with conversion to contract or permanent employment (e.g. after a certain number of months, your employer must offer to hire the person temping, unless they eliminate the job entirely and hire no other temps to do that job). I have no idea whether this sort of arrangement is in collective agreements - I'm no expert on the subject. I'd love to hear from people with a stronger labour background on this!

[ 02 October 2007: Message edited by: Michelle ]

We just negotatiated our first contract and the employer refused any language regarding conversion of contract employees to permanent positions. Unfortunately, it will be three years before we return to the table.
We could not push to hard as we had zero mandate for job action from the membership; in fact some of them would likely have crossed picket lines. This being a new shop, there is not a lot of buy in to labour principles yet. We even have a few Rands.

In all cases, employees are doing identical work to regular in scope employees. Unfortunately all these contracts were in place before the ratifacation of the agreement.

I was curious because somebody commmented upthread that if an employee of a third party is working exclusively for your company, they may have a case. In this case, the worker has been here for two years, working as a temp. It is ridiculous, but we are worried the company will just get rid of him if we push to hard.

ETA- we are a federally regulated company, if that makes any difference.

[ 03 October 2007: Message edited by: Jabberwock ]

[ 03 October 2007: Message edited by: Jabberwock ]