I am working at a firm in Miami full time on a 1099, the entire firm is employed on 1099's, even the people who have been there for years. ( firm size 10 people including the boss) I graduated from a top ten arch program right when the recession hit and was unable to find a job for a very long time, so I leaped at the first offer went my way. I have no prior experience and have only been working at the firm for 4 months and need advice , I am working full time but I think there are huge ethical issues going on here. I am on a 1099 and only get paid 17 an hour. Is that fair? I don't think I have enough experience on the job to apply elsewhere?? But then again I technically don't work for the firm. What should I do? What pay is reasonable? I live in Miami.
whatever you think you are worth, double it, cause that is how much you will pay in taxes at the end of the year...I would get on a quarterly payment schedule, with the IRS otherwise you are going to be hurting around tax time.
The employer is operating illegally if the people there are required to work given hours in the office space, to work on office equipment, and are being paid for general work not for a specific project.
As a recent grad, *if* you are learning a lot and generally enjoying yourself with good coworkers, it won't hurt to stay there for a year and get more experience. Be networking like crazy and documenting your experience like crazy so you'll be able to move on when you're ready. The employment market is hot right now so I'd suggest you go ahead and start looking - $17 is too low an hourly wage as a contractor, no matter how much fun you are having!
Also be prepared to pay 1/3 of what you make in taxes, so you're really only making $11.22/hour. But as a contract worker you are allwoed to deduct all your job-related expenses, even travel to the site.
It seems unlikely to me that your boss is a stand-up ethical person if s/he operates like this. Very shady, indeed.
You should also be aware of the implications of documenting experience as a 1099 'contractor' in regard to IDP. You should check with your state board for their requirements. NY state for example generally does not accept work done as a contractor for IDP.
Nick may be right on that, but 4 months isn't going to kill you. You didn't make a mistake, the foot is in the door, Miami area is big, just take the money and get looking.
OP, don't be burning people, this world is too small today, you will need the reference at your tender beginning, just stay the course and move on when you find an opportunity.
Donna, they say the government keeps whistle-blowers anonymous, but they don’t. My wife by law as a school owner is required to turn in suspected child abuse, did once and they revealed the source, lucky we weren’t sued, never reported again, that’s how that works.
Mar 13, 15 3:46 pm ·
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A 1099 is not one type of form but a list of forms starts with the 1099 nomenclature. Another part is a 1099 alone does not make you an independent contractor. Contract employees may also be on a 1099 because you are employed on a special contract vs. a standard employment contract.
Ultimately, you need to be sure and clear with the employer whether or not you are a contract employee or independent contractor and that when you are an independent contractor that you are treated as such and the requirements are met. A majority of the requirements of being an independent contractor should be met as viewed by both Federal and State.
I will not say if it is legit or not. However, there is reasons to be concern for clarity because you don't want to end up going to federal jail or home or bank accounts seized by IRS or your state's department of revenue. It is very serious if not done properly. Fines, jail time, seizure of properties and financial accounts and it is in the best interest of both the employee and the employer that it is done correctly. Because both can lose too much if not done appropriately.
It is worth a private conversation with the employer or 'client' (which the firm may be) If it is to be an independent contractor relationship then the relationship is not an employer/employee but a client/independent contractor relationship and they are the client and you are the contractor (not to be confused with construction contractor but it is a similar legal relationship).
If you are going to be considered an employee by the firm than they need to pay taxes on you and everything else as an employee even though you are a contract employee. If they can hire/fire you then you are an employee. If you are an independent contractor, they can not fire you. They can terminate contract but not 'fire' you. If they can dictate what hours you may work (not talking about setting deadlines) and if you work in their office, using their equipment then you're probably not an independent contractor because you lack independence of operation. If you may only work for them and no-one else, that further means you are an employee.
Everyone architect should become familiar with the employement rules; what it means to be a "salaried" employee, etc. Knowing these things going into a negotiation will help you immensely.
Everything Donna has mentioned is correct. Here are the definitions as set by the IRS. Local state laws will also have other degrees of differentiation but the federal distinction is a good standard: http://www.irs.gov/pub/irs-pdf/p1779.pdf
The thing is that firms will use the "independent contractor" status to basically skirt taxes and minimum wage standards. etc. etc.
The thing with fighting is that often it'll be for a relatively small sum of money (at most tens of thousands) and you'll wind up spending a lot of time and potentially incur relatively substantial legal fees for a small payout. In that sense it is difficult to fight despite they are clearly in the wrong. One way may be that the IRS will evaluate your income and find that you should not file under a 1099 and in doing so may come after your "employer"/client at that point.
My stance is that if a business is doing this to cut corners and make a buck, the business is either on very shaky financial ground (you should def run and go somewhere else) or the owner does not value you as a contributor (again, you should run). The "it's how it's done in architecture" excuse is reprehensible. No one's asking to make millions, but workers contributing to the business should be paid a livable and fair wage. If you can't figure out how to make money doing that, you should not be running a business. The more young workers succumb to these unethical practices, the more the bad behavior is reinforced. Working for someone that pays you well also benefits the industry as a whole.
This just occured to me, one potential recourse that may be through the AIA. As the AIA Associated Rules of Conduct state:
• Rule 5.301 Members shall recognize and respect the professional contributions of their employees, employers, professional colleagues, and business associates.
Best of luck. Above all you should always enjoy your work, and compensation figures into that complicated equation. You're not going to get rich doing this, but at least you should be happy.
You should already be looking for a new job. If that's how they treat their employees you need to get out as fast as possible. No two week notice or anything. Seriously. An employer like that isn't going to give you a reference when you leave, and it's not going to ruin your future in Miami. This owner really doesn't care about you or your career. Really. They don't. Just find something that pays more and an employer who respects you as a human being.
This is typical Miami practice. Firms here, large and small, are still using the myth of the recession to bully employees into staying, working for little, and offering little compensation. The only real firms here are the ones that are either huge corporate ones, or the few who have been in business for over 30 years (and even then it's a 50/50 shot they won't pay you what they're worth). Lots of old school thinking down here, and very resistant to change. I take it no one is getting any kind of benefits either?
Go talk to the IRS about what forms you need to fill out and when. You don't want to be owing unexpected sums down the line. Your visit to the IRS just might trigger an investigation that will force the firm to cut out the nonsense. However, it being Miami, just assume everything and everyone is corrupt.
eh, that is not legal. You cant 1099 your entire work force. Maybe theres some loophole...
I agree that you should be compensated for taxes. You wont pay a 100% rate as alluded to above, but you should be saving somewhere around 15-20%, ideally paying quarterly, though the penalty for not paying quarterly is negligible for a single income. Ideally theres some compensation for health, etc. I assume your liability is covered through the firm in some contract?
I would think a junor/entry level 1099 employee compensation should start somewhere around $25/$27 per hour, a few years out maybe $35+...all depends on cost of living of course..
just saw you are getting $17...I hope you are really green, because youre probably looking at taking home closer to $10-12/ hour after taxes. Also, as a contractor youre not likely to itemize expenses, but you probably should. If you dont, yes as stated above youll be on the hook for a bigger tax bill.
If you have any experience at all you should be trying to get $20/hr plus
OP - everything you spend your money on is an expense - transportation, food, rent, self medication via beer and spirits, etc...everything....even the time you spent posting this, you should be billing your employer....
$17 is a real bad joke though
so to be as funny as your employer, work less hard, bill extra time, etc...they should get what they paid for and at $17 an hour I think you should be able to barely answer the phones let alone open AutoCAD.
with that said, keep working until you find another job....a little experience goes a long way, 4 months is almost that threshold where the utter stupidity instilled in academia almost wears off and you become an asset....
i could not point to it in tax/labor law, but i have had multiple, independent affirmations previously from other architecture office owners that anything past 3 months on a 1099 is illegal on the part of the employer.
OP, you have my permission to burn carrera or R Balkins. they're nice guys, i don't think they would retaliate or spread nasty rumors. outside of those two, it's up to you.
my time is worth a shitton. i'll probably count this as a donation if i remember next year. you can totally write off the time you spend reading my posts. the same does not apply to some other posters here who do not add to the discussion. i'm a professional, so time spent talking you is a professional consultation. i am not an accountant though, and i am not a lawyer, so take advice with respect to those professions with a large grain of salt.
Mar 13, 15 10:11 pm ·
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curtkram, thanks for the link. I was a little busy with different tasks so I didn't search that link up but yes. I was going to point that from the Federal but also the state has to be be looked at, too.
OP,
My suggestion is the make sure and clear what the relationship is.
Fines, jail time and other charges are potential options but basically intentionally falsely identifying oneself can lead to serious ramification so it is best to get it squared out right.
I won't spread nasty rumors as I can not say whether there is a wrong happening but it is best to make sure it is squared away and corrections made voluntarily with IRS because they rather have the correct tax due or addressed and settled properly then throwing people in jail or other actions because it doesn't serve their end goal.
Mar 13, 15 11:59 pm ·
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Relooking through the tax code, in general, if you are an employee, you should be provided a W-2 because if I have an employee be it contract or not, I would have withholdings and other required withholdings and it usually cleaner in the paperworks because in general a 1099-MISC is intended for independent contractors and really should only be used for such.
Mar 14, 15 12:23 am ·
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AIA ethics codes doesn't mean squat unless a member of the AIA. The only thing AIA really can do is suspend/revoke membership or admonition. They can't really fine anyone because to do so, one has to actually be a government entity. Courts and legal system had made such practices not enforceable in court case law and that has precedence on future cases. That was done years ago. Otherwise, there would be more practice by private associations to fine members. It would however backfire and they would lose memberships. AIA depends on membership numbers and therefore is more incline to not losing members because whatever fines they would issue would end with membership termination and that doesn't stop an architect from practice.
AIA ethics is more a choice which although should be adhered to by their members, it isn't something that individual architects are going to worry too much about as it would be their licensing board(s) that they care about.
Mar 14, 15 12:35 am ·
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Nick Ladd,
You can be an independent contractor relationship and get IDP. Well, the theory and NCARB policy said so in their IDP 2.0 policies. HOWEVER, if you read IDP policy, and the degree of supervision and control an architect must have under licensure law and NCARB policy, I don't think you really truly be in an independent contractor relationship and still be really legally compliant somewhere but you may but often the degree of control an architect must have over the years makes it difficult to be compliant with licensing laws approving IDP hours of someone in independent contractor relationship. You really should be deemed an employee either conventional or contract employee but you would have tax withholding and all. It's a questionable deal at best.
I don't think a person is really an independent contractor relationship if they operate using your equipment, where you control their work hours, that they work for you and only you full year round at full time schedule, etc. I mean, one needs to demonstrate some degree of independence. In Oregon, we have more detail deal on this:
the right to control and the economic realities tests. Employers in Oregon should apply both tests and pass on both tests of determining if someone is an independent contractors.
In my rule, an independent contractor needs to pass 10 or more of the independent contractor column and in general, independence is key on both right of control and economic.
Free from direction and control;
Has a business location;
Performs services for multiple customers;
Sets own hours;
Determines own price for contracted services ;
Directly affected by business profit or loss
Owns equipment and tools used to complete job; (usually important in my consideration)
Personally liable for errors and/or accidents ;
Files self-employment taxes; receives a Form 1099-MISC
Has right to hire and fire workers
Must legally complete each contract ( This may apply to employees in some circumstances )
These 11 are almost always required in my book for a person to be an independent contractor.
You almost need to pass 8 or 9 out of these 11 or substitute one or more of these with any of the others but substantially, you need to have your own place of business separate of my own but on occasion it maybe the same place technically if I contracted my brother for example for something but for it to be an independent contractor relationship, having one's own equipment and maintaining at least 9-12 out of the 16 on the Independent contractor relationship is critical.
Otherwise, a person should be treated as an employee. That relationship has to be maintained throughout the entire contract. I think complying with that would meet federal and also other many other states definition of independent contractor relationship.
I rely more on use of ones own equipment and materials/supplies if they do not have their own business. In other words, independent contractors should not use my own computer and equipment or paper/printers. The more independent they are the better.
I can still be deemed an independent contractor under ORS 670.600 without being licensed under 671 or 701 because of exemption in 671.030 and not doing construction requiring licensure under ORS 701. Key words is if licensure is required for the services. If you understand these multiple layers of Oregon state laws and regulation where some of the priority lies in the 11 above.
ORS 670.600:
Under this law, workers may be properly classified as independent contractors provided they
Are free from direction and control, beyond the right of the service recipient to specify the desired result, AND
Are licensed under ORS 671 or 701 (State Landscape Architect Board or Landscape Contractors Board and State Board of Architect Examiners or Construction Contractors Board) if licensure is required for the service, AND
Are responsible for other licenses or certificates necessary to provide the service AND
Are customarily engaged in an “independently established business.”
To qualify under the law, an “independently established business” must meet 3 out of the following 5 criteria):
Maintain a business location that is:
Separate from the business or work location of the service recipient; or
that is in a portion of their own residence that is used primarily for business.
Bear the risk of loss, shown by factors such as:
Entering into fixed price contracts;
Being required to correct defective work;
Warranting the services provided; or
Negotiating indemnification agreements or purchasing liability insurance, performance bonds, or errors and omissions insurance.
Provide contracted services for two or more different persons within a 12-month period, or routinely engage in business advertising, solicitation or other marketing efforts reasonably calculated to obtain new contracts to provide similar services.
Make a significant investment in the business through means such as:
Purchasing tools or equipment necessary to provide the services;
Paying for the premises or facilities where the services are provided; or
Paying for licenses, certificates or specialized training required to provide the services.
Have the authority to hire and fire other persons to provide assistance in performing the services.
Additional provisions:
A person who files tax returns with a Schedule F and also performs agricultural services reportable on a Schedule C is not required to meet the independently established business requirements
Establishing a business entity such as a corporation or limited liability company, does not, by itself, establish that the individual providing services will be considered an independent contractor.
A matrix of these multitudes of criteria and common requirements all factor in.
This other factor applies: remember the economic realities test and the Right to control tests... basically the BOLI tests.
Ideally, every employer should review their state laws on this as this can often define more intricately than the Federal law and usually passing the state standards would often pass the Federal standards but always make sure you meet both your Federal and your required state(s) standards.
Whoah there Archguy--I still agree with some of the other posters saying if you need the experience, just grin and bear it for a year. Experience is more important to you now than salary in my opinion. Best of luck!
@ Richard, thanks for the lengthy reply. NY state spells it out pretty clearly. I am certain that there are variations state to state:
"Please Note: Experience obtained in any work setting as a consultant or contract worker is generally not given any credit towards the experience requirement for licensure in New York State. If you have experience as a consultant or contract worker, please have your supervisor submit a letter to the State Board for Architecture outlining your role and responsibilities on projects and how the experience gained was lawful in nature."
I believe NY state's policy has to do with the fact that by the nature of the IRS' definition of being a contract worker, you are not under the direct supervision and control of anyone. If this is the case, then it would be contrary to the requirements of IDP requiring the direct supervision of a licensed architect.
Every state is different and can set their own requirements for licensing outside of what is set forth by NCARB and IDP.
Everyone's given great advice. Keep working until you find something better, keep receipts of everything as it can help you reduce your tax liability (healthcare; mileage and meal per diem you can use GSA standards - they're pretty generous and you can deduct lunch and probably dinner every day; any and all trips you can consider 'research' for architecture, ditto for all meals with friends -if you discuss architecture I think it counts; same for any equipment -phone, computer, software, camera, headphones, etc). I'd think in Miami $25-$35/hr is not unreasonable (works out to about $35-45 + benefits). Keep in mind that your pay is mostly going to be tied to what you bring into an office (so the offices that make more $ can pay you better, but those may not be doing the 'coolest' thing).
OP, you should know that the IRS looks at small business very hard. If they call you in for an audit you are going to have back up your deductions and they suffer no bullshit whatsoever. My advice would be to talk with an accountant on what to do.
I was a 1099 construction worker for 3 years in California and drove on the 405 everyday. I saved every receipt and still it added up to jack. Even if you take all these deductions, these taxes are going to hurt.
I have had more than one accountant tell me that any business mixed with personal is a red flag and will not be a deduction.
Mar 16, 15 5:27 pm ·
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Nick Ladd
Most states go by the NCARB policy but of course experience has to be done under premise of lawful practice of architecture and if the supervisor is breaking law/regulation regarding stamping of drawings then he or he is not engaging in lawful practice of architecture even though licensed... and the intern ultimately would not gain IDP credit. However, the law may have a specific context in mind in that one would not get credit as a building designer or credit for preparing drawings and the architect merely rubber stamp.
Like said, each state is different. I couldn't rationally post as in-depth for every state in a single post. I would think it would choke the server.
Rough Numbers - The OP only makes $34 000., subtracting taxes brings that down to $23,000, he’s allowed a standard deduction of $6,100. (Presumed to be mostly business related) which leaves about $17,000 for housing, food, personal expenses & loan payments (about $1,400. /month - in Miami) I think if he went beyond the standard that in itself could be a red-flag….IRS does this kind of math.
Dunno - on the SE worksheet I'd take the daily per diem (GSA in Miami is $66), that'll add up 40wks*5days*$66=$13,200; knocks down that taxable income quite a bit.
@LNSN, I meant $35k-$45k+ benefits; assuming short term disability, health insurance, and employer portion of taxes (7%?), 15 days paid (sick/vacation/personal), and 5~10 holidays: $25x52wksx40hrs=$52k; $35k salary + 4 wks off ($3500)+ $2000 health (assuming $167/mth) + $500 st disability + 2500 taxes (7%) = $42.5k total compensation (a bit off, some of it depends on health care costs, etc - in the NE $167/mth buys you a lower health plan HDHP or HMO)
Those numbers take me back..…gives me a stomach ache, think about the time-off - 10% of time you can’t bill for….look at the typical pie chart for an office….saving this one for the next thread that wonders about being laid-off….where else do you cut? Don’t think it’s rent because most leases are guaranteed personally by the principals, tied to their houses. Salaries are nutcrackers at any level.
Its time to leave archguy22. The economy is much better now and every time I go to MIA I see nothing but cranes in the air. I think your current boss is being very unethical practicing this way and you can do better. A first year intern there should expect to make between $35-40K base salary AND have insurance, 401K option, and a couple weeks paid time off. What you have to consider is who you're working for to get that. There are certainly many small firms there trying to be the next super starchitect. If you want to work for one of the boutique design firms, working on super high-end residences and competitions, then the salary deal you have right now seems about right. I'm not saying this is a bad option, just that you should be willing to accept what comes with that career route. If the firm you are working for now is not that type of firm, that's a huge red flag! However, if you look at the larger (and oh no! CORPORATE!) firms you can find a good job, mentors, and professionals who treat you like you matter . . . and I think you'll be surprised that the projects you work on aren't the boring corporate architecture you've been led to believe is all they do. There are several good options in south FL.
Mar 17, 15 10:27 pm ·
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I think people ought to realize in this profession, architecture employees tends to have higher than average salary from entry level on than most other consultant / personal-professional service based businesses. That is different than occupations like software development where the salary/wage may range from minimum wage to well higher than a typical architecture firm principal without even being executive/prime shareholder/board of directors level. That is because of different business models and software being a commodity operation on a large market such as a global market. So making big money is easy but in those operations, labor costs is usually consumes 10-15% of gross revenue not 20-40% which is what we see commonly in architecture because direct labor consumes so much of the gross revenue. The plain reason is how architecture businesses often computes their rates such as billed hourly rate. Instead of computing a 6 to 10x multiplier to the direct hourly rate, many firms compute fees around a 2.5x to 3x multiplier.
I'm not limiting my referenced to licensed architects but also building designers as well.
This is generally the good side but things get really ugly when people either layed off, quit and set out on their own without any clue to the billing framework of an architectural business bills just their direct labor or worse just to get the job.
It is one thing to bill unusually low under limited circumstances / reasoning where it is humanly justifiable. While in other cases, you bill appropriately.
I do agree with others that there is better options out there as of current.
Mar 17, 15 11:08 pm ·
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Is my job legit?
I am working at a firm in Miami full time on a 1099, the entire firm is employed on 1099's, even the people who have been there for years. ( firm size 10 people including the boss) I graduated from a top ten arch program right when the recession hit and was unable to find a job for a very long time, so I leaped at the first offer went my way. I have no prior experience and have only been working at the firm for 4 months and need advice , I am working full time but I think there are huge ethical issues going on here. I am on a 1099 and only get paid 17 an hour. Is that fair? I don't think I have enough experience on the job to apply elsewhere?? But then again I technically don't work for the firm. What should I do? What pay is reasonable? I live in Miami.
whatever you think you are worth, double it, cause that is how much you will pay in taxes at the end of the year...I would get on a quarterly payment schedule, with the IRS otherwise you are going to be hurting around tax time.
Short answer? No.
http://www.lexisnexis.com/legalnewsroom/immigration/b/outsidenews/archive/2012/11/15/1099-scam-exposes-abused-workforce-in-construction.aspx
It is legal but you are still getting fucked.
30% taxes, no health insurance, no overtime, no sick days, no holidays, no unemployment insurance.
You are going to owe these taxes at the end of the year.
This is what companies are doing now, and not just in architecture.
This is what is called income disparity.
My advice is run to from these weasels as fast as you can.
The employer is operating illegally if the people there are required to work given hours in the office space, to work on office equipment, and are being paid for general work not for a specific project.
As a recent grad, *if* you are learning a lot and generally enjoying yourself with good coworkers, it won't hurt to stay there for a year and get more experience. Be networking like crazy and documenting your experience like crazy so you'll be able to move on when you're ready. The employment market is hot right now so I'd suggest you go ahead and start looking - $17 is too low an hourly wage as a contractor, no matter how much fun you are having!
Also be prepared to pay 1/3 of what you make in taxes, so you're really only making $11.22/hour. But as a contract worker you are allwoed to deduct all your job-related expenses, even travel to the site.
It seems unlikely to me that your boss is a stand-up ethical person if s/he operates like this. Very shady, indeed.
OK to start out that way, foot-in-the-door.
Maybe Donna and Carrera are giving you better advice. However, the companies that do this shit are douche bags.
Leverage your experience and get out of there as soon as you can.
You should also be aware of the implications of documenting experience as a 1099 'contractor' in regard to IDP. You should check with your state board for their requirements. NY state for example generally does not accept work done as a contractor for IDP.
I don't disagree, Lye Nerd. The next question will be once OP *does* stop working here, does s/he turn the douchebag in to the Department of Labor?
Nick may be right on that, but 4 months isn't going to kill you. You didn't make a mistake, the foot is in the door, Miami area is big, just take the money and get looking.
Donna,
Quixotic at best I suppose. Unfortunately, the political will is not there. The unemployment rate is down along with income.
OP, don't be burning people, this world is too small today, you will need the reference at your tender beginning, just stay the course and move on when you find an opportunity.
Donna, they say the government keeps whistle-blowers anonymous, but they don’t. My wife by law as a school owner is required to turn in suspected child abuse, did once and they revealed the source, lucky we weren’t sued, never reported again, that’s how that works.
A 1099 is not one type of form but a list of forms starts with the 1099 nomenclature. Another part is a 1099 alone does not make you an independent contractor. Contract employees may also be on a 1099 because you are employed on a special contract vs. a standard employment contract.
Ultimately, you need to be sure and clear with the employer whether or not you are a contract employee or independent contractor and that when you are an independent contractor that you are treated as such and the requirements are met. A majority of the requirements of being an independent contractor should be met as viewed by both Federal and State.
I will not say if it is legit or not. However, there is reasons to be concern for clarity because you don't want to end up going to federal jail or home or bank accounts seized by IRS or your state's department of revenue. It is very serious if not done properly. Fines, jail time, seizure of properties and financial accounts and it is in the best interest of both the employee and the employer that it is done correctly. Because both can lose too much if not done appropriately.
It is worth a private conversation with the employer or 'client' (which the firm may be) If it is to be an independent contractor relationship then the relationship is not an employer/employee but a client/independent contractor relationship and they are the client and you are the contractor (not to be confused with construction contractor but it is a similar legal relationship).
If you are going to be considered an employee by the firm than they need to pay taxes on you and everything else as an employee even though you are a contract employee. If they can hire/fire you then you are an employee. If you are an independent contractor, they can not fire you. They can terminate contract but not 'fire' you. If they can dictate what hours you may work (not talking about setting deadlines) and if you work in their office, using their equipment then you're probably not an independent contractor because you lack independence of operation. If you may only work for them and no-one else, that further means you are an employee.
Donna is right.
Everyone architect should become familiar with the employement rules; what it means to be a "salaried" employee, etc. Knowing these things going into a negotiation will help you immensely.
^^Richard again with his sage legal advice.
Don't they teach that class in Architecture School?
Everything Donna has mentioned is correct. Here are the definitions as set by the IRS. Local state laws will also have other degrees of differentiation but the federal distinction is a good standard: http://www.irs.gov/pub/irs-pdf/p1779.pdf
and an AIA essay: http://www.aia.org/akr/Resources/Documents/AIAB095064
and AIA guidelines for employers: http://www.aia.org/aiaucmp/groups/aia/documents/pdf/aias077746.pdf
The thing is that firms will use the "independent contractor" status to basically skirt taxes and minimum wage standards. etc. etc.
The thing with fighting is that often it'll be for a relatively small sum of money (at most tens of thousands) and you'll wind up spending a lot of time and potentially incur relatively substantial legal fees for a small payout. In that sense it is difficult to fight despite they are clearly in the wrong. One way may be that the IRS will evaluate your income and find that you should not file under a 1099 and in doing so may come after your "employer"/client at that point.
My stance is that if a business is doing this to cut corners and make a buck, the business is either on very shaky financial ground (you should def run and go somewhere else) or the owner does not value you as a contributor (again, you should run). The "it's how it's done in architecture" excuse is reprehensible. No one's asking to make millions, but workers contributing to the business should be paid a livable and fair wage. If you can't figure out how to make money doing that, you should not be running a business. The more young workers succumb to these unethical practices, the more the bad behavior is reinforced. Working for someone that pays you well also benefits the industry as a whole.
This just occured to me, one potential recourse that may be through the AIA. As the AIA Associated Rules of Conduct state:
• Rule 5.301 Members shall recognize and respect the professional contributions of their employees, employers, professional colleagues, and business associates.
Best of luck. Above all you should always enjoy your work, and compensation figures into that complicated equation. You're not going to get rich doing this, but at least you should be happy.
You should already be looking for a new job. If that's how they treat their employees you need to get out as fast as possible. No two week notice or anything. Seriously. An employer like that isn't going to give you a reference when you leave, and it's not going to ruin your future in Miami. This owner really doesn't care about you or your career. Really. They don't. Just find something that pays more and an employer who respects you as a human being.
This is typical Miami practice. Firms here, large and small, are still using the myth of the recession to bully employees into staying, working for little, and offering little compensation. The only real firms here are the ones that are either huge corporate ones, or the few who have been in business for over 30 years (and even then it's a 50/50 shot they won't pay you what they're worth).
Lots of old school thinking down here, and very resistant to change. I take it no one is getting any kind of benefits either?
Go talk to the IRS about what forms you need to fill out and when. You don't want to be owing unexpected sums down the line. Your visit to the IRS just might trigger an investigation that will force the firm to cut out the nonsense. However, it being Miami, just assume everything and everyone is corrupt.
working for others SUCKS.
keep working until you find another job.
eh, that is not legal. You cant 1099 your entire work force. Maybe theres some loophole...
I agree that you should be compensated for taxes. You wont pay a 100% rate as alluded to above, but you should be saving somewhere around 15-20%, ideally paying quarterly, though the penalty for not paying quarterly is negligible for a single income. Ideally theres some compensation for health, etc. I assume your liability is covered through the firm in some contract?
I would think a junor/entry level 1099 employee compensation should start somewhere around $25/$27 per hour, a few years out maybe $35+...all depends on cost of living of course..
This is all pretty shady if you ask me.
couple more things...
just saw you are getting $17...I hope you are really green, because youre probably looking at taking home closer to $10-12/ hour after taxes. Also, as a contractor youre not likely to itemize expenses, but you probably should. If you dont, yes as stated above youll be on the hook for a bigger tax bill.
If you have any experience at all you should be trying to get $20/hr plus
OP - everything you spend your money on is an expense - transportation, food, rent, self medication via beer and spirits, etc...everything....even the time you spent posting this, you should be billing your employer....
$17 is a real bad joke though
so to be as funny as your employer, work less hard, bill extra time, etc...they should get what they paid for and at $17 an hour I think you should be able to barely answer the phones let alone open AutoCAD.
with that said, keep working until you find another job....a little experience goes a long way, 4 months is almost that threshold where the utter stupidity instilled in academia almost wears off and you become an asset....
i could not point to it in tax/labor law, but i have had multiple, independent affirmations previously from other architecture office owners that anything past 3 months on a 1099 is illegal on the part of the employer.
here's the link to the irs's page on independent contractors if it helps
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
OP, you have my permission to burn carrera or R Balkins. they're nice guys, i don't think they would retaliate or spread nasty rumors. outside of those two, it's up to you.
my time is worth a shitton. i'll probably count this as a donation if i remember next year. you can totally write off the time you spend reading my posts. the same does not apply to some other posters here who do not add to the discussion. i'm a professional, so time spent talking you is a professional consultation. i am not an accountant though, and i am not a lawyer, so take advice with respect to those professions with a large grain of salt.
curtkram, thanks for the link. I was a little busy with different tasks so I didn't search that link up but yes. I was going to point that from the Federal but also the state has to be be looked at, too.
OP,
My suggestion is the make sure and clear what the relationship is.
Fines, jail time and other charges are potential options but basically intentionally falsely identifying oneself can lead to serious ramification so it is best to get it squared out right.
I won't spread nasty rumors as I can not say whether there is a wrong happening but it is best to make sure it is squared away and corrections made voluntarily with IRS because they rather have the correct tax due or addressed and settled properly then throwing people in jail or other actions because it doesn't serve their end goal.
Relooking through the tax code, in general, if you are an employee, you should be provided a W-2 because if I have an employee be it contract or not, I would have withholdings and other required withholdings and it usually cleaner in the paperworks because in general a 1099-MISC is intended for independent contractors and really should only be used for such.
AIA ethics codes doesn't mean squat unless a member of the AIA. The only thing AIA really can do is suspend/revoke membership or admonition. They can't really fine anyone because to do so, one has to actually be a government entity. Courts and legal system had made such practices not enforceable in court case law and that has precedence on future cases. That was done years ago. Otherwise, there would be more practice by private associations to fine members. It would however backfire and they would lose memberships. AIA depends on membership numbers and therefore is more incline to not losing members because whatever fines they would issue would end with membership termination and that doesn't stop an architect from practice.
AIA ethics is more a choice which although should be adhered to by their members, it isn't something that individual architects are going to worry too much about as it would be their licensing board(s) that they care about.
Nick Ladd,
You can be an independent contractor relationship and get IDP. Well, the theory and NCARB policy said so in their IDP 2.0 policies. HOWEVER, if you read IDP policy, and the degree of supervision and control an architect must have under licensure law and NCARB policy, I don't think you really truly be in an independent contractor relationship and still be really legally compliant somewhere but you may but often the degree of control an architect must have over the years makes it difficult to be compliant with licensing laws approving IDP hours of someone in independent contractor relationship. You really should be deemed an employee either conventional or contract employee but you would have tax withholding and all. It's a questionable deal at best.
I don't think a person is really an independent contractor relationship if they operate using your equipment, where you control their work hours, that they work for you and only you full year round at full time schedule, etc. I mean, one needs to demonstrate some degree of independence. In Oregon, we have more detail deal on this:
http://www.oregon.gov/boli/TA/pages/t_faq_independent_contractors_11-2010.aspx
the right to control and the economic realities tests. Employers in Oregon should apply both tests and pass on both tests of determining if someone is an independent contractors.
In addition there is this:
http://www.oregon.gov/IC/pages/icn-brochure-textonly.aspx
I like this link as well.
In my rule, an independent contractor needs to pass 10 or more of the independent contractor column and in general, independence is key on both right of control and economic.
Free from direction and control;
Has a business location;
Performs services for multiple customers;
Sets own hours;
Determines own price for contracted
services ;
Directly affected by business profit or loss
Owns equipment and tools used to complete job; (usually important in my consideration)
Personally liable for errors and/or accidents ;
Files self-employment taxes; receives a Form 1099-MISC
Has right to hire and fire workers
Must legally complete each contract ( This may apply to employees in some circumstances )
These 11 are almost always required in my book for a person to be an independent contractor.
You almost need to pass 8 or 9 out of these 11 or substitute one or more of these with any of the others but substantially, you need to have your own place of business separate of my own but on occasion it maybe the same place technically if I contracted my brother for example for something but for it to be an independent contractor relationship, having one's own equipment and maintaining at least 9-12 out of the 16 on the Independent contractor relationship is critical.
Otherwise, a person should be treated as an employee. That relationship has to be maintained throughout the entire contract. I think complying with that would meet federal and also other many other states definition of independent contractor relationship.
I rely more on use of ones own equipment and materials/supplies if they do not have their own business. In other words, independent contractors should not use my own computer and equipment or paper/printers. The more independent they are the better.
I can still be deemed an independent contractor under ORS 670.600 without being licensed under 671 or 701 because of exemption in 671.030 and not doing construction requiring licensure under ORS 701. Key words is if licensure is required for the services. If you understand these multiple layers of Oregon state laws and regulation where some of the priority lies in the 11 above.
ORS 670.600:
Under this law, workers may be properly classified as independent contractors provided they
To qualify under the law, an “independently established business” must meet 3 out of the following 5 criteria):
Additional provisions:
A matrix of these multitudes of criteria and common requirements all factor in.
This other factor applies: remember the economic realities test and the Right to control tests... basically the BOLI tests.
http://www.oregon.gov/boli/TA/docs/boli-whd_test_11-2010.pdf
http://www.oregon.gov/boli/TA/docs/boli-crd_test-11-2010.pdf
Ideally, every employer should review their state laws on this as this can often define more intricately than the Federal law and usually passing the state standards would often pass the Federal standards but always make sure you meet both your Federal and your required state(s) standards.
Here's a decent article about it. NYTimes.
Thanks for all the advice. I will be looking for a new job now! I just hope I will have opportunities at firms with such little experience.
Whoah there Archguy--I still agree with some of the other posters saying if you need the experience, just grin and bear it for a year. Experience is more important to you now than salary in my opinion. Best of luck!
@ Richard, thanks for the lengthy reply. NY state spells it out pretty clearly. I am certain that there are variations state to state:
"Please Note: Experience obtained in any work setting as a consultant or contract worker is generally not given any credit towards the experience requirement for licensure in New York State. If you have experience as a consultant or contract worker, please have your supervisor submit a letter to the State Board for Architecture outlining your role and responsibilities on projects and how the experience gained was lawful in nature."
http://www.op.nysed.gov/prof/arch/archlic.htm
I believe NY state's policy has to do with the fact that by the nature of the IRS' definition of being a contract worker, you are not under the direct supervision and control of anyone. If this is the case, then it would be contrary to the requirements of IDP requiring the direct supervision of a licensed architect.
Every state is different and can set their own requirements for licensing outside of what is set forth by NCARB and IDP.
Everyone's given great advice. Keep working until you find something better, keep receipts of everything as it can help you reduce your tax liability (healthcare; mileage and meal per diem you can use GSA standards - they're pretty generous and you can deduct lunch and probably dinner every day; any and all trips you can consider 'research' for architecture, ditto for all meals with friends -if you discuss architecture I think it counts; same for any equipment -phone, computer, software, camera, headphones, etc). I'd think in Miami $25-$35/hr is not unreasonable (works out to about $35-45 + benefits). Keep in mind that your pay is mostly going to be tied to what you bring into an office (so the offices that make more $ can pay you better, but those may not be doing the 'coolest' thing).
^ I think your math is way off.
OP, you should know that the IRS looks at small business very hard. If they call you in for an audit you are going to have back up your deductions and they suffer no bullshit whatsoever. My advice would be to talk with an accountant on what to do.
I was a 1099 construction worker for 3 years in California and drove on the 405 everyday. I saved every receipt and still it added up to jack. Even if you take all these deductions, these taxes are going to hurt.
I have had more than one accountant tell me that any business mixed with personal is a red flag and will not be a deduction.
Nick Ladd
Most states go by the NCARB policy but of course experience has to be done under premise of lawful practice of architecture and if the supervisor is breaking law/regulation regarding stamping of drawings then he or he is not engaging in lawful practice of architecture even though licensed... and the intern ultimately would not gain IDP credit. However, the law may have a specific context in mind in that one would not get credit as a building designer or credit for preparing drawings and the architect merely rubber stamp.
Like said, each state is different. I couldn't rationally post as in-depth for every state in a single post. I would think it would choke the server.
Rough Numbers - The OP only makes $34 000., subtracting taxes brings that down to $23,000, he’s allowed a standard deduction of $6,100. (Presumed to be mostly business related) which leaves about $17,000 for housing, food, personal expenses & loan payments (about $1,400. /month - in Miami) I think if he went beyond the standard that in itself could be a red-flag….IRS does this kind of math.
Dunno - on the SE worksheet I'd take the daily per diem (GSA in Miami is $66), that'll add up 40wks*5days*$66=$13,200; knocks down that taxable income quite a bit.
@LNSN, I meant $35k-$45k+ benefits; assuming short term disability, health insurance, and employer portion of taxes (7%?), 15 days paid (sick/vacation/personal), and 5~10 holidays: $25x52wksx40hrs=$52k; $35k salary + 4 wks off ($3500)+ $2000 health (assuming $167/mth) + $500 st disability + 2500 taxes (7%) = $42.5k total compensation (a bit off, some of it depends on health care costs, etc - in the NE $167/mth buys you a lower health plan HDHP or HMO)
Those numbers take me back..…gives me a stomach ache, think about the time-off - 10% of time you can’t bill for….look at the typical pie chart for an office….saving this one for the next thread that wonders about being laid-off….where else do you cut? Don’t think it’s rent because most leases are guaranteed personally by the principals, tied to their houses. Salaries are nutcrackers at any level.
lye nerd--
In my experience it has always been WAY better to take standard mileage (I think around $.48/mile this year) than direct expenses.
Its time to leave archguy22. The economy is much better now and every time I go to MIA I see nothing but cranes in the air. I think your current boss is being very unethical practicing this way and you can do better. A first year intern there should expect to make between $35-40K base salary AND have insurance, 401K option, and a couple weeks paid time off. What you have to consider is who you're working for to get that. There are certainly many small firms there trying to be the next super starchitect. If you want to work for one of the boutique design firms, working on super high-end residences and competitions, then the salary deal you have right now seems about right. I'm not saying this is a bad option, just that you should be willing to accept what comes with that career route. If the firm you are working for now is not that type of firm, that's a huge red flag! However, if you look at the larger (and oh no! CORPORATE!) firms you can find a good job, mentors, and professionals who treat you like you matter . . . and I think you'll be surprised that the projects you work on aren't the boring corporate architecture you've been led to believe is all they do. There are several good options in south FL.
I think people ought to realize in this profession, architecture employees tends to have higher than average salary from entry level on than most other consultant / personal-professional service based businesses. That is different than occupations like software development where the salary/wage may range from minimum wage to well higher than a typical architecture firm principal without even being executive/prime shareholder/board of directors level. That is because of different business models and software being a commodity operation on a large market such as a global market. So making big money is easy but in those operations, labor costs is usually consumes 10-15% of gross revenue not 20-40% which is what we see commonly in architecture because direct labor consumes so much of the gross revenue. The plain reason is how architecture businesses often computes their rates such as billed hourly rate. Instead of computing a 6 to 10x multiplier to the direct hourly rate, many firms compute fees around a 2.5x to 3x multiplier.
I'm not limiting my referenced to licensed architects but also building designers as well.
This is generally the good side but things get really ugly when people either layed off, quit and set out on their own without any clue to the billing framework of an architectural business bills just their direct labor or worse just to get the job.
It is one thing to bill unusually low under limited circumstances / reasoning where it is humanly justifiable. While in other cases, you bill appropriately.
I do agree with others that there is better options out there as of current.
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