Re: Payment Delay in 1099 Employment Contract

Subject: Re: Payment Delay in 1099 Employment Contract
From: Lauren <lauren -at- writeco -dot- net>
To: techwr-l -at- lists -dot- techwr-l -dot- com
Date: Tue, 19 Apr 2011 14:17:01 -0700

On 4/19/2011 5:14 AM, Trish Robertson wrote:

I just received a contract for a six- to eight-week gig on a 1099 that states these payment terms: "$X per hour billed bi-weekly and payable net 30 days." I am very uncomfortable with that delay. Not only do I need money sooner than six weeks, but, potentially, I could complete my contract before seeing any money--and who knows whether they will pay.

First off, you need to determine if you are really a contractor. Typically, if you set your own hours and your own methods of completing the work, then you may be a contractor. If your client requires that you be on site and sets your hours, then you are an employee. Are you incorporated? Does the IRS consider you an independent contractor for tax purposes?

http://www.irs.gov/irm/part4/irm_04-023-005r.html

http://www.irs.gov/pub/irs-utl/x-26-07.pdf

http://www.irs.gov/pub/irs-utl/irpac-br_530_relief_-_appendix_natrm_paper_09032009.pdf

Unless you are incorporated and have the autonomy of seeking other clients while you work for this one, then assuming the risks of a client not paying you is not a good idea. If you are only working for one client, then you may want to retain the protections you have as an employee.

Previously, when working on a 1099, I was payed within two days.

Who is paying you? Are you being paid by the client who is receiving your work or by an agency or some other third-party? If you are being paid by a third-party, like an employment agency or a recruiter, then you are working for that third-party. The client may have a contract with the third-party to pay the third-party after 30 days, but that does not mean you have to wait. If you are an employee of the third-party, then that third-party must pay you according to the law of your state.

I believe that in Massachusetts, permanent employees must be paid bi-weekly, but are there any rules governing the timeliness of payment to consultants/contractors?

There are rules, but your state does not make this information very easy to find.

http://www.mass.gov/?pageID=elwdhomepage&L=1&L0=Home&sid=Elwd

Massachusetts has adopted a treble damages rule. This means that if an employer does not pay an employee according to the schedule set by law, the employee can seek three times the pay owed.

http://www.mbbp.com/resources/employment/wage-hours-law-ma.html

Read the above article and pay close attention to the section, "Misclassification of Workers As Independent Contractors."

Does anyone have any insight about this issue?

You tell me...


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References:
Payment Delay in 1099 Employment Contract: From: Trish Robertson

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