>That’s not legally a contractor then. [...] If you are setting their hours, bossing them around and/or providing equipment they are not a contractor they are an employee.
There are 2 different uses of "contractor":
(1) contractor : official IRS tax classification of 1099 independent contractor
(2) "contractor" : a W-2 employee of a "temp agency" or "staffing agency" or "bodyshop" that is sent to a client company (such as Google) needing contingent workers. Adecco[1] is an example of a staffing company that sends people to Google. These temp agencies with workers classified as W-2 employees act as legal cover to "avoid repeating Microsoft lawsuits". From Google's perspective, these Adecco employees are "contractors".
If the above working arrangement looks convoluted with the economic inefficiencies of paying for an extra middleman (the temp agencies), it is. But it cleverly avoids the IRS claiming, "Hey Google, your so-called contractors are misclassified and should be employees!" ... and Google can say, "They already are employees! They're Adecco employees!"
The "1099 real contractor" is not as common as "fake-contractor-but-really-somebody-elses-W2-employee" ... because the "1099 contractors" won their lawsuit against Microsoft.
The tax reform act of 1986 removes the safe-harbor provision for engineers and programmers. This strange sentence means that if a company hires an engineer or programmer - as an independent contractor - and the IRS later decides that this person is really an employee, then the company is liable for back taxes and probably penalties. For other professions, the "safe harbor" provision means that the company is only liable for paying the employer share of taxes going forwards - the previous stuff is handwaved away.
In effect, this scares companies so much that it is very difficult to get hired as a 1099 contractor as a programmer/engineer. The vast majority of companies will require you to be a W-2 employee of some other company (which will be the "staffing agency" or "bodyshop" or "temp agency").
One programmer was driven to fly his aircraft into an IRS building due to this issue.
I'm a mostly fake contractor. I miss the good old days when I could fake contractor directly to companies. Now I have to go through a middle-man that takes a cut. I still make triple what I was making before, but it bothers me that the middle man is likely taking 30-50% off the top.
These laws do not protect workers, they protect entrenched wealthy body shops.
IIRC they can, but only if the other company is also paying some proportion of the costs relative to how many of their employees are present, or something like that. It's been a little while but the rules are in some training presentation or other.
And the ruling makes it
clear that it’s based on the actual on the ground reality, which is why vendors get pulled in the same way.
If the main company is the one giving the vendors employees their direction, managing them, setting hours explicitly, they get included in all hands, etc. then the main company is also on the hook for being their actual employer as far as benefits, taxes, etc. go.
So there needs to be a clear delineation at all times, or bad things happen to the primary company regarding costs.
There are 2 different uses of "contractor":
(1) contractor : official IRS tax classification of 1099 independent contractor
(2) "contractor" : a W-2 employee of a "temp agency" or "staffing agency" or "bodyshop" that is sent to a client company (such as Google) needing contingent workers. Adecco[1] is an example of a staffing company that sends people to Google. These temp agencies with workers classified as W-2 employees act as legal cover to "avoid repeating Microsoft lawsuits". From Google's perspective, these Adecco employees are "contractors".
If the above working arrangement looks convoluted with the economic inefficiencies of paying for an extra middleman (the temp agencies), it is. But it cleverly avoids the IRS claiming, "Hey Google, your so-called contractors are misclassified and should be employees!" ... and Google can say, "They already are employees! They're Adecco employees!"
The "1099 real contractor" is not as common as "fake-contractor-but-really-somebody-elses-W2-employee" ... because the "1099 contractors" won their lawsuit against Microsoft.
[1] https://www.adeccousa.com/