In the early 1990s before Microsoft lost, I easily got direct-1099 contracting jobs at various companies.
Afterwards, every company got scared and overcorrected away from 1099s. It didn't matter if you incorporated as "Joe's Programming Solutions Inc".
They insisted you had to go through one of their "approved vendors" which was basically just a middleman company set up to hire you as a W-2 employee. That intermediate company would then contract you to the 1099-averse client. Microsoft's defeat was when all the "W-2 bodyshops" popped up.
Instead of me earning $100 directly from a client, I had to find a W-2 shop to "hire" me as an employee and let them skim $30 from my hourly billing so I would only net $70/hour. It wasn't too happy about that but that's the closest I could get to being a freelancer. I really didn't want to be anyone's employee.
I believe most contractors share my opinion that the overall effect of the court judgement against Microsoft was a net negative and it didn't improve work conditions for contractors. Instead, it just made it worse by enriching middlemen we never asked for. It's also a net negative for the client company because they pay a somewhat higher bill rate to the W-2 company because they provide the service of "legal cover" to protect against a Microsoft type of lawsuit or IRS reclassification. It's a textbook version of economic inefficiencies.
My plan was literally "pay $100 per month to avoid the 2% Obamacare tax." It covered basically nothing, and the deductible was ridiculous.
The only value "talent agencies" add is that you can start earning money immediately, instead of jumping through whatever hoops vendors need to jump through to be approved nowadays.
I got the invitation directly from the large company I was consulting for. They explained to me that they didn't work directly with freelancers; they had processes in place to prevent TVCs from being retroactively deemed FTEs (and compensated for withheld benefits). Therefore, they put me in touch with an agency whose only function was to hire freelancers as W2 employees and rent them back out to the company. I don't recall exactly: I think the agency's only client was the firm I was consulting for. They might have had 1 or 2 more. The whole we-only-exist-because-bureaucracy was pretty transparent.
Funny story: one of the TVC restrictions was that you could only be one for a year. (At the end of the year, you had to either convert to full-time or take 6 months off.) Partway through the year, my client decided they wanted to switch agencies. Thousands of us got an email that basically said "As of next week, you legally work for Other Agency. Your day-to-day work will be the same."
I was making $100 per hour with a guaranteed 40 billable hours per week.
It was very informative at one place I worked where a ticked off employee released a spreadsheet with all of the hourly rates for all the consultants. I was rather amused to lean how many bad actor agencies there were (although gratified that I worked with the honest sort). It was a bit amazing to me that people were baffled that I didn't really want to look at the spreadsheet. I knew my rate, was pretty happy, and was a bit worried it would impact how I viewed others.
And you no longer have to pay $9 of social security and medicare employer taxes, right?
That's a confusing way of putting it.
> Yes, someone is providing a 'service' for 30% of your billing
And that's pretty misleading as a followup.
You're paying them 30% to perform services and to pay that 9% tax for you. So you're effectively paying closer to 21% for their services. That's still a lot. But it's significantly less.
Their hands are tied.
And I agree with you. If the Microsoft scenario happens it will end up worse for people who prefer being a consultant/contractor. Of course, some temps would prefer an FTE role.
If I remember correctly, the contract company was mostly concerned with co-employment. As it was explained to me, Microsoft had a similar setup, but contractors were treated exactly the same as employees. Those contractors sued and won all of the additional compensation they had been denied as contractors.
For that reason, Google can't have too much control over things like hiring and firing decisions, healthcare offerings, compensation, etc, lest they be considered a co-employer. In the article, it sounds like the Google employees want Google to wield its power to enforce particular HR policies on their contractors, but I'm not entirely sure that's possible.
Disclaimer: I'm a biologist, not a lawyer.
Edit: (bit of background) from what I see (through her) really hard to get directly into Pharma here in Germany/EU even with a PhD and decent CV.
To start, would I do it again? Yes, in a heartbeat. I was fresh out of undergraduate with a degree in biology, but very little experience in labs. I spent several months applying to jobs and not hearing back at all. I eventually answered a very odd job ad, and they were basically so desperate for bodies that they interview almost everyone who applies with the appropriate degree.
There were two systems for that company at the time, but both were on-site in the pharma company's facility, using their equipment. The first was a core lab that did a bunch of cell culture and other various work and only interacted with people at the pharma company as clients. The second is essentially a contractor embedded in a pharma lab, doing whatever work the lab needed.
I was in the second type of lab. I had some basic computer stuff on my resume, and they decided that matched well with a lab that needed someone to do CT scan analysis. I only saw my boss at the contracting company in the halls or at monthly check-ins; otherwise, all of my daily interactions were from the lab's PI and pharma employees. I eventually was a supervisor to the other contractors in my department, and I was on the management track, but I wanted to stay in the science.
I spent a few years as a contractor. That original PI retired and I moved to another lab that I still work in. Getting hired as a contractor is a pain in the ass, because the job has to be posted internally first, and I wasn't allowed to apply until it was posted externally.
In my mind, the contract company served to hire people with little experience, give them the necessary basic skills (pipetting, weighing, maybe ELISAs, TaqMan, etc) and weed out people who couldn't learn new things, which is of value to the pharma company. As a contractor, I learned all of the practical stuff that hadn't been taught in college, and I got to network with tens of labs. I was somewhat fortunate that I love the lab I was placed in, so I didn't hesitate to apply for a full-time position when it became available, but I also was very aware of a couple of labs I would have been miserable in, which is also more information to have than a true outsider would have.
Lastly, the majority of people at my level (hands-on research) who are hired from outside without knowing someone on the inside are hired for very specific skills, and I had none at the time.
I'm happy to answer more specific questions if it would be helpful. My email is my username @ gmail. Good luck to her!
The other way Google can control all of these aspects even for contractors is to refuse to work with contractors who do not uphold the standards they set. As these contracting companies exist solely to provide contract work to big tech cos, they will fall in line immediately.
Apple hires hoards of contractors for all sorts of roles internally (experimental projects, kitchen staff blah blah).
Google popup locations are not comparable to Apple Stores.
Hmm. But if they try to match (or come close) to Google's standards then Google will likely have to pay more for a contractor than they do for an employee. At that point might as well just hire them.
As best I can tell, it is a different pot of money. In my company, contractors are a budgetary decision, while employees require HR and other hurdles. Similarly, when you want to cut costs, you can fire contractors (shrink the contract and let the contract company do whatever they need to) without making the news with a headline like "Google lays off 10% of its workforce".
Plus contracting overhead on both sides (the contractor-side overhead is neither an employment cost for the contracting firm nor profit.)
1. They don't want to be in the business of hiring/vetting/training/supplying benefits for people who aren't part of the business's core competency (security guards, cooks/baristas, receptionists, etc.).
2. Bureaucratically, TVCs are a lot easier to hire. You don't need months of interviews or headcount approvals in your budget: you just need to be able to spend money.
Of course, these problems are both theoretically solvable if a business cared to solve them. (It really bothers me that the people who take care of us aren't always well taken-care-of.) However, it's important to understand that there are multiple factors at play. TVCs are often chosen less for cost savings; more because at the hiring manager level, they're a lot easier to get approved.
On the one hand, many of the complaints are absolutely correct. Where I worked contractors were:
- Second class citizens
- Often worked on teams with other engineers, and ended up being in charge of a major part of the project
- Have subpar working conditions but are still required to come to the office (ie crappy working spaces with fewer amenities, often the inability to sit with their actual team)
- In worst case scenarios can often end up with abusive manager who at times will explicitly let them know their place as a contractor
- Get the runaround when it comes to discussion 'conversion' to full time employment. I've seen this happen only a handful of times
From what I've seen the ones most beholden to this crappyness are contractors who are non US citizens (after all if you are a citizen what's stopping you from applying to literally almost any other job... even at a large tech company). Contractors from outside the US are pretty much stuck.
On the flipside the bar for contractors and full time employees is VASTLY different. For contractors (at least in engineering) the interview process can be mostly boiled down to about five recruiter style questions on your area of expertise, or something as simple as "build a class that does XYZ, ok you're great for this role". No full day onsite interview loops with multiple whiteboard / architecture questions etc.
I'm not saying with proper preparation contractors couldn't do the same roles and aren't qualified, but they are also held do a different standard (for better or for mostly worst).
I've also seen many contractors leverage the name-brand of the company they worked for to get interviews that may have been previously inaccessible (yes, even with putting "contracting for X company" on your resume, Google / Apple et all still stand out to recruiters).
1. I mostly get to choose how much I work, currently around 25 hours per week.
2. Despite fewer hours, I still make more annually than I ever did working full-time.
3. I don't have waste time going to all-hands meetings, mandatory trainings, offsites, etc.
4. I can work on my own side projects without worrying about an employer trying to claim the IP.
Maybe you could argue there's less job security, but if you think you have much of that with at-will employment, you're fooling yourself.
My least favorite part of being an employee is goals/reviews. I much preferred just saying, my rate is $X this year, you can pay it or not.
But that said this equality effort isn't about folks like us, it's about helping out those that need healthcare, holiday pay, etc. I'm on the side of those in need getting the benefits over our privileged lives being mildly altered.
I want to be clear I'm not intending to say anything negative about the domestic or foreign workers. It's just an amusing situation imo.
Not only was my pay higher (to compensate for no-notice termination), I paid less income tax because many expenses were deductible (car, power, house, phone, computers, etc).
It turned out to be something like double my typical salary, with health insurance taken care of by taxes.
Are the tax rules different in the US?
Money you pay for health and dental insurance is counted as a reduction against your AGI — technically this is even better than a deduction, as long as you don’t qualify for insurance through another employer, and cannot exceed your total employment earnings. So you can’t decline employee sponsored health insurance and also claim the reduction, and you can’t deduct premiums to the point where you have a net loss.
Qualified expenses go on Line 29 of Form 1040 where it says “Self-employed health insurance deduction”.
You do not have to incorporate or setup an LLC to claim the deduction.
I'm not an accountant or lawyer, so take what I say with a grain of salt. Should be able to setup a LLC in the state you do business in. Be careful in California, the LLC will cost you $800 a year even if you make no profit.
Once you have an umbrella company you can write off valid business expenses, including health insurance premiums. Be sure to pay quarterly federal tax payments if you are making profit.
Normally, contractors are self employed, and can use expenses as deductions etc. This doesnt apply in this case, is my guess.
Pay yourself a fair salary (usually around 30%) along with FICA, take the other 70% as a company dividend and not have to pay Social Security, etc. Not paying FICA is a big saving. It's a very typical S-Corp payment arrangement. It just usually requires an accountant to manage (make sure you pay tax estimations on time, etc).
With the corporate tax cuts last year, there's even further savings.
An Uber/Lyft driver could operate as a corp if they wanted to.
Yeah, except the part about health insurance. In fact I know a lot of folks who had to do the insurance 2-step (find a job for a month - or whatever period - or longer then get terminated and keep the COBRA benefits so they could pay insurance yourself). Not sure if Obamacare now that it's been around for a bit alleviates the fact that the insurance market for individuals used to really really suck.
Another way to resolve the health issue is to have a spouse who works to get health insurance so you can contract.
Google contracts out a lot of already ... not that great jobs, they're not getting paid more for being contractors already....
Yup, someone in the family has to have insurance or you're toast if you've got a family sadly :(
AFAIK contractor-style employment (working for a contracting agency at GOOG) is considered no different from working directly for GOOG individual-tax-wise. It would be more like the situation you describe in NZ if you had your own business for which you did contracting.
Having to actually cut a check for a several grand every quarter seems like it feels worse than having it taken out of your check.
Wow, that seems like something very hard to argue against. I hope that even if Google keeps them as contractors they improve communications.
That didn't last.
I had a friend who was a contract developer back when their NYC footprint was just the 8th avenue building and he was working 4 people to a cubicle.
well yeah, that is the point of contractors ...
I highly encourage others here to watch it should they have 72 minutes to spare.
Yes, security communication should go to all. But everything else?
Some of those seem very much the essence of the difference between working for Google as an employee vs not working for Google as an employee.
The letter linked in the article says it was written by TVCs (Temps, Vendors, and Contractors).
I guess "Contractors Write to CEO Demanding Equal Treatment for Contractors" is less exciting?
But the bigger problem having this discussion in a tech context is the tech community is also made of up many who derive near religious identity from their jobs and conflate their jobs with success and identity, and logical arguments cannot appeal to emotion and this need for hierarchy.
To delve into hypotheticals, company X has a building and hires company Y to clean it. Company Y employs the janitors full time, and company Y decides the policies for hiring and firing janitors, and decides what their schedules are. The janitors are working at FTE conditions, and therefore they are full-time employees, but they're not employees of company X and don't get the same benefits.
I'm not sure about any subtleties here- when exactly this kicks in, etc. But there are some real protections.
The test here comes down to how much control the company has. If the company controls schedules, pays ordinary wages, provides equipment and training, etc. then it's an employee. If the person can set their own schedule, gets paid for work completed, buys their own equipment, and is free to work for other companies then it's likely a contractor.
I know that Google has an office in Tel Aviv so it should be easy enough to check if they have the same kind of staffing they do elsewhere. The company I work at mostly uses contractors and vendors for things like janitorial service, catering, etc. At least, as far as I can tell, I'm more of a code monkey.
They're not very effective / desirable for higher skill jobs IMO where merit and skills change rapidly.
Granted that's all very general and I'm sure there are exceptions but unions (I hear they're different elsewhere) in the US are kinda wonky, not very agile, and can become an negative entity in many ways as they serve their own interests.
Er, what? That was the point.
You: Unions are mainly effective for low-skill, manual jobs.
ForHackernews: But they have them for professional athletes and actors too.
You: Irrelevant, they're a whole different animal.
Yes, the point all along was that the union model applies to different animals/worker-types.
"SAG-AFTRA represents approximately 160,000 actors, announcers, broadcast journalists, dancers, DJs, news writers, news editors, program hosts, puppeteers, recording artists, singers, stunt performers, voiceover artists and other media professionals."
When I was a freelance orchestral musician I loved the union. There was a huge difference in how you were treated during union vs non-union gigs.
Their group medical benefits were "you pay for it and submit each bill individually". It was pretty brutal, they showed no interest in changing it at the time.
They have enforced the Physician monopoly to the point where its cronyism.
There is a reason Physicians make 300k/yr.
I will never ever support an organization that puts up artificial barriers to what is currently a very open work industry.
I would join the group just to sabotage it if they tried to keep out bootcampers or people without a CS degree. Anyone should be allowed to program.
No negative sentiment implied here. I am an immigrant myself.
As much as both parties gave lip service to healthcare reform, they both supported cutting the independent advisory board on pricing before it even got a chance to get started.
There are trade offs to collective bargaining, especially if you feel you're at the top of the skill curve among workers (If you're in the 1% of workers, why would your value be helped by bargaining with the other 99%) but the idea is always that in any negotiation of you vs. "the company" the advantage is typically in favor of the company because of the deferred costs across the entire organization. The larger the company gets, the greater this advantage becomes. Yes, there are other companies competing for top talent, and coding is an exceptionally in demand skill (which BTW, many hiring managers still prioritize seniority/experience over true meritocracy) which helps in the short term but since everyone is pushing coding education initiatives, I can't imagine this will be the state of things in the future. Right now, since there's more Senior Dev job openings than people with Senior Dev skills, there may be a slightly more neutral negotiation table. We'll see how that plays out in 10 years.
Any time you have a large group of people, there's going to be disagreements about organizational choices or decisions as to how best to allocate resources. If you're unwilling to buy into the group, it's always going to feel like an albatross instead of a benefit.
A coders union could be a good thing in the long term. Right now, the sector is still too chaotic, and lots of people are making stupid amount of money. If that starts changing...
Teaching ... not so much.
IT workers are typically considered professionals why can negotiate for themselves.
The general rule of thumb is how "replaceable" a worker is. Someone like a doctor or a hard to find engineer is considered professional, and thus a union is not needed.
Someone who has a lot of handholding on their job, and can easily be replaced by someone else who will train quickly, is what a union is for.
Thus, a union might work for the cleaning crew, foodservice crew, and maybe even Waymo testers. It won't work for software engineers, because engineers should be able to negotiate for themselves.
Why? Is there something about software that inherently makes its practitioners shrewd negotiators?
Part of what keeps software salaries down is the uncapped supply of talent competing for a small number of jobs. Tough to expect much negotiating power.
I have no desire to increase the amount of people who have control over my working environment and getting in between my employment contracts that I negotiate with potential employers.
Having only one entity that can screw up my working conditions (the employer) is much better than having 2 entities that can screw it up (both the employer and the union.)
When dealing with a single entity, the relationship is clear. I negotiate with them, and offer my work in exchange for a contract that we both agree on.
It would screw up incentives to have a third party who has significant control over my mutually agreed contracts.
Further, these groups aren't mutually exclusive in some cases. Many contract electricians are unionized, for example.
Often people who should be employees are classified as contractors.
In this case, a union would advocate that contractors are really misclassified employees.
But I think at this point the CEO failed correct the problem of at hand and now will have to deal with every injustice a few googlers see fit to scream about.
From here on out all I can see is it getting worse, and then the shareholders firing the CEO and replacing him with one who will deal with sort of issues appropriately.
We can talk all day about what is appropriate, but I think many will agree you can't have your employees hold a company hostage over political beliefs. But then again, Google set themselves up with this problem with their silly hiring practices.