Now what

ritaanz

My Buyer is out on FMLA. The Purchasing Manager and the CFO discussed a temporary replacement. Yesterday I was told the Purchasing Manager's husband would be in today as the temp Buyer. Ok so far.

We completed the necessary forms for payroll. I gave the gentleman a slip to go to our clinic for a drug screen. All part of our hiring procedure.

The CFO comes to me with the slip and tells me I made a mistake. The temp buyer will not be on the payroll. He is an independent contractor and will be paid by company check. When I tell him that he does not fall under the definition of independent contractor, the CFO says he does. But now will be paid from petty cash with a 1099 at the end of the year.

What say all you wise ones??

NaeNae55

I think it is time to ask more questions. If he is just filling in, will use her desk and work her hours, then he is a temporary employee and not an independent contractor. If he is has a contract that he will buy a certain amount or specific thing for a specific period, and he comes and goes as he pleases and does the buying using his own methods, etc, then he is an independent contractor. Ask more questions.

Nae

joannie

I agree with Nae. Also, you might look at your nepotism policy, if you have one. Do you report to the CFO? If not, and utilizing this person as an IC when he isn't is against your policy, talk to you boss.

ritaanz

The temp will be using our phones, desk, pens, etc. following instructions from wife and working a regular work day.

The CFO is my boss.

System

If the temp is doing the job that the regular employee would have been doing if not for the FMLA leave, the person is not an independent contractor. Do you think the CFO honestly believes that the person is an IC, or do you think this is the CFO's way of saying, "We're treating this worker as an independent contractor," period, regardless of whether the person actually is an IC? If the former, maybe you can give the CFO some extra info regarding the definition of independent contractor and the risks of misclassifying employees or convince him or her to seek advice from an attorney on the matter. If the latter, there's probably not much you can do other than try to impress upon the CFO the risks involved and hope s/he does the right thing.

ray a

I agree, he is not an independent contractor, he is a temporary ee. Here's another solution. Do you ever use temp agencies? Hire him through a local temp agency, he'll be on their payroll and their ee. Typically, I do not have short term temps through an agency drug tested. The unspoken problem is that it sounds like this husband knows he won't pass the drug test. That would make his wife suspect, too. We would not allow the husband to work for the wife, either.

joannie

Ritaanz,
Looks like it's CYA time. Document everything provided to CFO, then just grin and bear it.

ritaanz

All good responses. I do not think the CFO really believes this guy is a IC. He is trying a quick fix to the Purchase Manager's problem. He has told me that since this guy will not make more than $600 or $6000 (don't remember which one he said)he can be paid from petty cash.

I have not heard that there is a dollar threshold. My concern is wage and hour audit. The Purchasing Manager is not well liked. I can just see an irate employee making a telephone call.

NaeNae55

You report independent contractors to the IRS via a 1099M. The law has a threshold of $600.

It sounds like your CFO is trying to avoid tax issues on several levels. If the temp earns less than $600 and you don't report his wages, then he also may feel free not to report them (though he is required to by law). In the case of an IC, he would have to pay both the employer and employee portion of FICA taxes. You can't control what he does, but if it were me I would make a point to mention it to the temp. He may think he doesn't have to pay, or not be happy if he finds that the employer expects him to pay both parts of FICA taxes.

Other than making sure both the CFO and the temp are aware of the law, and documenting that you did so, I don't see what else you can do. I would seriously doubt the honesty of this CFO in the future though. If he can be dishonest in so little a thing, how can you trust him with the biggies?

Good luck!

Nae

ritaanz

Nae, thanks bunches. If the temp earns less than $600, there is no 1099.

I am sure the temp doesn't expect anything but the cash. I'm not sure if the CFO is dishonest or trying to appease the Purchasing goddess.

njjel

I've discovered over the years that when the boss wants to do something and you know it isn't the way it should go, you have three choices, push the point and get fired or document that you've told the boss the correct way and then let it go or start job hunting! good luck!

mbeam

Don't envy the position that you are in - do you have any policies about family members (especially spouses) working for one another? Think that in itself is a can of worms not to mention the other issue.

Certainly doesn't look like it would pass the IC test - can you call a meeting with your CFO and CEO to express concerns about not having the individual set up as a temp? Would definitely as other posters have pointed out advise on the legality of it.

Better yet, would send info to them in an e-mail expressing concerns so that you're on record for not being in favor of doing this.

ritaanz

That was my first thought. But the CFO feels very strongly about what happens in Admin stays in Admin. If I sent that email I would be toast. Especially since I already told the CFO about ICs.

Got the picture? I am going to follow the advise given and document. Since I had already completed all the necessary paperwork for payroll, I added a memo to file explaining the decision to pay from petty cash.