# What rights do misclassified employees have?

**URL:** <https://boards.straightdope.com/t/what-rights-do-misclassified-employees-have/764801>\
**Category:** In My Humble Opinion\
**Created:** [September 2, 2016, 6:45pm UTC](https://boards.straightdope.com/t/what-rights-do-misclassified-employees-have/764801 "2016-09-02T18:45:16Z")\
**Posts on this page:** 1\
**Page:** 2

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**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\
**Post date:** [September 3, 2016, 1:45am UTC](https://boards.straightdope.com/t/what-rights-do-misclassified-employees-have/764801/21 "2016-09-03T01:45:23Z")

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> [@Lemur866](#):
>
> I’ve worked many “contract” jobs as a computer guy, but I always got a W2 from the contracting agency, not a 1099. I was an employee of the agency, who was the contractor to the client. And when you hear about big companies like Microsoft or Amazon hiring large numbers of contractors, that’s how they handle it.

Sometimes.

I run a small IT consulting firm. All of our consultants are their own S-Corps or LLCs - so its all corp to corp to corp. No W-2s involved.

Which highly paid IT professionals love - you get to write off the commute (keep an office at home), you pay yourself a “reasonable” salary and only pay SS taxes on that, you book your training in Hawaii and write off part of the trip - and you give yourself a W-2 - the rest arrives to you as pass through ordinary income, but you avoid self employment taxes. Its a great deal in terms of reducing tax burden.

Corporations sometimes demand W-2 (and we can do it if we have to - but its harder to find the level of developer we deal with willing to do W-2 - financially, it isn’t nearly as advantageous and the people we deal with are smart enough to know that.) Corporations like W-2 contractors through an agency because it gets rid of any question of their involvement in employment status.

The third type is 1099, where the consultant isn’t incorporated and you file a 1099. We avoid those. W-2 or corp to corp. Safer for us. We either control employment taxes - or we are paying a corporation and the taxes are their problem. (And incorporating in Minnesota will cost your $135 - off the top of my head - which is currently a little fuzzy - Redbreast cask strength).

(I tell all our consultants when I onboard that they need an accountant, insurance agent, and attorney - if they don’t have them already. Its possible to hold off on the attorney, but get yourself an accountant and insurance)

My husband and I have worked all three ways during our own consulting careers. If they pay bench time (few do right now) W-2 all the way. If I worked for Accenture or McKinsey or something, I’d expect, and want, to be W-2. But if you are really an independent contractor - corp to corp.

However, it doesn’t sound like k9bfriender’s employee is the sort of highly paid IT professional we tend to deal with who is running their own S-Corp because they are savvy and have an accountant and attorney that is giving them advice on maximizing their income.

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