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Old 09-03-2009, 03:02 PM   #9
Gina K. Designs
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Join Date: Jul 2006
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Originally Posted by webseitler View Post
Thanks, Jennifer! I'm still holding out hope.

I totally get protecting the brand. But you girls are not employees. What you choose to do in your off time on-line is your own business, I think! I'm pretty darn shocked at this news from SU!. I think it goes far outside "protecting a brand" (especially since we're not talking about SU! demo blogs but all blogs and all sites and all commutations!).

Kinda makes me wish I was still a demo... so I could make my voice heard by quitting! LOL!
You are right about that. My understanding is that when someone is an independent contractor- you can not dictate how they run their business.

You are purchasing a service from them. You contract for what you both agree to and that's that. If you try to control what they do too much, they begin to fall under the heading of "employee" and that will get you in a whole lot of hot water if you aren't paying the proper taxes on them.

One of the facts that provides evidence of an employee vs. an independent contractor is-

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Another one is: Does the company mandate that the worker only work for them (employee) or is the worker allowed to do the same job for many companies. (Ind. Contractor)

This could all open up a whole can of worms for Stampin' Up. They may find that they actually have thousands and thousands of employees and that they owe lots of money to the IRS in the form of FICA tax on everyone who they who they are treating like employees vs. independent contractors.

From the IRS website:

1. Three characteristics are used by the IRS to determine the relationship between businesses and workers: Behavioral Control, Financial Control, and the Type of Relationship.

2. Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means.

3. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker's job.

4. The Type of Relationship factor relates to how the workers and the business owner perceive their relationship.

5. If you have the right to control or direct not only what is to be done, but also how it is to be done, then your workers are most likely employees.

6. If you can direct or control only the result of the work done -- and not the means and methods of accomplishing the result -- then your workers are probably independent contractors.

7. Employers who misclassify workers as independent contractors can end up with substantial tax bills. Additionally, they can face penalties for failing to pay employment taxes and for failing to file required tax forms.

8. Workers can avoid higher tax bills and lost benefits if they know their proper status.

It's becoming more of a gray area when it comes to Stampin' Up. There are special rules for Statutory Nonemployees which direct sales falls under however, it is clear that you can not treat these people as employees under the guidelines set above.
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