Is this employer a Jerk?

weilke said:
If done right, an operator can use someone as a contractor for a while and turn them employee at some other point in time. They just have to be careful to structure the relationship in a way that the difference is defensible. The factors the IRS (and most states) look at are Financial control, behavioral control and contractual relationship.

Couple of things that suggest you are a contractor:

- you get paid 'per trip' rather than a hourly wage See below
- you have to cover your training expenses (type, recurrent) Company paid
- you have autonomy on issues like what charts to use, weather sources, Use Company Jepps
- you have financial risk Just on payday trying to cash my check
- autonomy to hire helpers (e.g. determine who your SIC is and hire him/her) I am supplied company First Officers

Couple of things that suggest that you are a employee:

- you get paid by the hour See Below
- employer pays for recurrent training They do
- you are told to wear a particular uniform I am
- you are told where to report for work YES, what charts to use YES, what weather source to consult any legal source
Click to expand...

I get paid $36K per year plus $150 per day I fly or am on 'the road' as well as $2.50 per hour on the road for per-diem. Same as any other 'light jet' Captain at company...employed or contract.
 
Captain said:
I get paid $36K per year plus $150 per day I fly or am on 'the road' as well as $2.50 per hour on the road for per-diem. Same as any other 'light jet' Captain at company...employed or contract.
Click to expand...

In my non-lawyer, non-CPA, non-EA opinion the relationship between you and the company seems to be that of an employer and employee, including the period when they paid you as contractor. If you went to the IRS or state labor department they would probably classify you as such. You could make a fuss and get the 90 day period re-classified forcing your employer to:
- pay their share of payroll taxes for the 90 days (reducing your liability for self-employment tax for the 90 days)
- pay workmans comp premiums for that period (unless they already did, some employers pay workmans comp on contractors just to be protected from lawsuits)
- pay unemployment insurance contributions for the 90 days.
- possibly provide you with the same benefits as an employee for that time period (pension contributions etc.). That's a state issue, FL may not require that.

They would not be happy and there may be repercussions, e.g. firing you 'for cause' based on some made up allegations that could negatively impact your employability as a professional pilot in the future.
 
Last edited:
weilke said:
In my non-lawyer, non-CPA, non-EA opinion the relationship between you and the company seems to be that of an employer and employee, including the period when they paid you as contractor. If you went to the IRS or state labor department they would probably classify you as such. You could make a fuss and get the 90 day period re-classified forcing your employer to:
- pay their share of payroll taxes for the 90 days (reducing your liability for self-employment tax for the 90 days)
- pay workmans comp premiums for that period (unless they already did, some employers pay workmans comp on contractors just to be protected from lawsuits)
- pay unemployment insurance contributions for the 90 days.

They would not be happy and there may be repercussions, e.g. firing you 'for cause' based on some made up allegations that could negatively impact your employability in the future.
Click to expand...

Well that hardly seems fair in a country governed by 'laws'.
 
Captain said:
Well that hardly seems fair in a country governed by 'laws'.
Click to expand...

Well, that is a problem anyone in the netherworld between contractors and employees has to deal with. If you are a independent contractor drywall guy in a hot construction market and some general contractor jerks you around on timely payments, there is little downside to hanging him up with the feds. You go to the next construction site keep drywalling.
In areas like pilot services or goverment contracting that requires a security clearance, the balance of power is tilted towards the employer. They can harm you, be it through a negative reply to a PRIA inquiry down the line or by providing derogatory information about you to the agency that issued your clearance.
 
My question is are you a "contract" employee or are you on a new hire probation? If they are deducting taxes, I think it sounds like you're on a 90 probation.;) We tell everyone that we hire they are on a 90 probation, no benefits etc, but Georgia and I believe Florida are employment at will states, so they don't need a reason to fire you contract employee or regular employee.:D
We keep a separate payroll account and every Thursday we transfer the amount of Friday's payroll to that account. It's not about interest these days, 0.25% just isn't enough to worry about, it's about having separate accounts and easier reconciliation.:D We have had issues in the past where the bank failed to make the transfer, maybe twice in 2-3 years, but most of my folks have direct deposit, so it wasn't an issue.;)
I'd definitely be handing out resumes!
 
Does your company have any sort of cashier that could cash your check for you? I have been known to cash employees checks when payday fell on a bank holiday. Until I got everyone on direct deposit.
 
In Texas you could take your bounced check to the local county attorney, who would prosecute them for a crime.

You could also take it to the Texas Workforce Commission and get them fined.

I'm a non-practicing Enrolled Agent, but have an interest in a tax resolution company. I mention this because what we often see in companies that can't make payroll is that they are not depositing your taxes and social security withholding amounts.

You might want to check on that.
 
If you are truly a contract employee, then the employer will file a form 1099 to report your income, and you will be required to pay tax on that. The other "tests" that are used to determine employment vs. contract employment status are really only applicable if your job classification is non exempt under FSLA. Generally pilots are considered to be exempt and would be on a salaried basis, so contracting the position is a non issue to the extent that the company does proper reporting and the contractor pays the taxes. Different story for, say a flight attendant or a desk clerk, where contract employment might be used as a means for circumventing FSLA.
 
Sac Arrow said:
If you are truly a contract employee, then the employer will file a form 1099 to report your income, and you will be required to pay tax on that. The other "tests" that are used to determine employment vs. contract employment status are really only applicable if your job classification is non exempt under FSLA. Generally pilots are considered to be exempt and would be on a salaried basis, so contracting the position is a non issue to the extent that the company does proper reporting and the contractor pays the taxes. Different story for, say a flight attendant or a desk clerk, where contract employment might be used as a means for circumventing FSLA.
Click to expand...

How do flight instructors fit into it? I remember when I was starting a bunch of flight schools on the field got in trouble with the IRS over claiming the instructors as contractors because the flight school set the instructor schedules.
 
I had another thought on this interesting case. What about PRIA? Would the flight school keep PRIA records on 'independent' contractors?

Also, in any question about employee/contractor status, IRS form 8 is your friend.
 
One of my ancestors was imprisoned for doing exactly the same thing, kiting checks. Last I checked it was still illegal.
 
Henning said:
How do flight instructors fit into it? I remember when I was starting a bunch of flight schools on the field got in trouble with the IRS over claiming the instructors as contractors because the flight school set the instructor schedules.
Click to expand...

It's a gray area. There was a ruling a while back that held certain commercial helicopter pilots as non-exempt, and I think that extends to non-supervisory level commerical fixed wing pilots as well. But I'm not completely familiar with pilot applications specifically. I do have to deal with this issue for technical industrial type positions. In other words if you're a chief pilot or a captain, it's easy to defend exempt status. Less so as you go down the food chain.
 
Reminds me of the good 'ol days of Dad flying air taxi on the BC Coast. Seems there were 4 pilots on payroll, but only enough money in the account for paying 3 every payday. Became a race to the bank every payday, guy #4 got his pay the week following.

Ah the memories.
 
JimNtexas said:
I had another thought on this interesting case. What about PRIA? Would the flight school keep PRIA records on 'independent' contractors?
Click to expand...

They are not required to maintain records. If they have records, they are certainly able to release them.
 
Sac Arrow said:
If you are truly a contract employee, then the employer will file a form 1099 to report your income, and you will be required to pay tax on that. The other "tests" that are used to determine employment vs. contract employment status are really only applicable if your job classification is non exempt under FSLA.
Click to expand...

The last sentence is incorrect. Sac Arrow is confusing the laws concerning overtime pay for employees with the laws that distinguish contractors from employees.

There is no such thing as a 'contract employee'. A working is person is one or the other. You can't be a little bit employee and a little bit contractor.
 
JimNtexas said:
The last sentence is incorrect. Sac Arrow is confusing the laws concerning overtime pay for employees with the laws that distinguish contractors from employees.

There is no such thing as a 'contract employee'. A working is person is one or the other. You can't be a little bit employee and a little bit contractor.
Click to expand...

Well, I wouldn't say incorrect but I could have worried it better. There are two issues at stake here:

IRS

The IRS could give a rat's ass whether a person is an employee or a contractor as long as they get their cut and it's reported properly.

Department of Labor

The DOL is concerned that FSLA laws are adhered to for non-exempt classifications to which it's applicable. Their concern over contract status is that it can be a means of circumventing FSLA and would therefore consider certain administrative contractors to be de facto employees.
 
gismo said:
I suspect that if you're not aboard ship away from port you're probably always available for a free beer.:D
Click to expand...

I have spent thousands of dollars to fly someplace for a free beer. Danos and I even flew all the way from PA to Cozumel for a free beer, and then turned around and flew back the next morning. :D
 
Ted DuPuis said:
I have spent thousands of dollars to fly someplace for a free beer. Danos and I even flew all the way from PA to Cozumel for a free beer, and then turned around and flew back the next morning. :D
Click to expand...
You use that word (free) a lot but I don't think it means what you think it means.
 
gismo said:
You use that word (free) a lot but I don't think it means what you think it means.
Click to expand...

The concept of free is an illusion, since everything has a cost.
 
Sac Arrow said:
Well, I wouldn't say incorrect but I could have worried it better. There are two issues at stake here:

IRS

The IRS could give a rat's ass whether a person is an employee or a contractor as long as they get their cut and it's reported properly.
.
Click to expand...

Sorry Sac Arrow, The IRS cares very much about the difference between employees and contractors. And certainly employer, worker, and the state employment regulators care very much.

It's clear that tax law is unfamiliar to you, so you really need to stop spreading this misinformation.

I'll certainly defer to you on any question regarding employer/employee overtime issues.

Again, there is no such thing as a 'contract employee'.
 
Last edited:
Captain said:
.........Aren't there laws requiring you to have funds available on the account that you write a check on?.....What say you...the smart masses? Thanks.

Captain.
Click to expand...

Do you work for the US Government :idea:;)...... :rofl: :lol:

I feel for ya.. First you get caught up in the Sierra Lima Fiasco and now this outfit..... You have a knack for picking looser employers......:yikes:
 
JimNtexas said:
Sorry Sac Arrow, The IRS cares very much about the difference between employees and contractors. And certainly employer, worker, and the state employment regulators care very much.
Click to expand...

The IRS gets their pound of flesh whether you get paid 1099 or w2. The only difference is that the contractor has a bit more stuff he can deduct as ordinary business expense vs. Employee business expenses. Unless the IRS gets their nose stubbed into it via union complaint or ss8 from a slighted contractor, they dont go looking for ICs to screw with. The state labor an unemployment folks loose 100% of their loot, they have a lot more motivation to shake down ICs by raiding conatruction sites etc.
 
lose, Loose="She was so loose I had to strap a 2x4 to my ass to keep from falling in."
 
JimNtexas said:
Sorry Sac Arrow, The IRS cares very much about the difference between employees and contractors. And certainly employer, worker, and the state employment regulators care very much.

It's clear that tax law is unfamiliar to you, so you really need to stop spreading this misinformation.

I'll certainly defer to you on any question regarding employer/employee overtime issues.

Again, there is no such thing as a 'contract employee'.
Click to expand...

You're right, I'm not a tax lawyer and I don't claim to be. The point I am making is that IRS's interest in contract vs employment status is ensuring tax laws are complied with (correct?) and it's not their jurisdiction to cover employee wage and benefit laws (correct?). Can we agree on that? Because that's really all I said.

No, I never said a person could be an employee and a contractor at the same time. I will say that, although it isn't strictly correct, the term "contract employee" is commonly used to describe a contractor that has been hired to fill a position normally held by an employee.
 
Sac Arrow said:
You're right, I'm not a tax lawyer and I don't claim to be. The point I am making is that IRS's interest in contract vs employment status is ensuring tax laws are complied with (correct?) and it's not their jurisdiction to cover employee wage and benefit laws (correct?). Can we agree on that? Because that's really all I said.

No, I never said a person could be an employee and a contractor at the same time. I will say that, although it isn't strictly correct, the term "contract employee" is commonly used to describe a contractor that has been hired to fill a position normally held by an employee.
Click to expand...

As far as I know everything you said about wage and benefit laws is correct.

Sadly, everything you said related to taxes was categorically wrong had to be corrected least some reader of this thread might really think that pilots are always treated as employees by the IRS, or that the IRS doesn't care if a worker is an employee or contractor.

I'll cut you a little slack on 'contract employee', because people who don't know better use it a lot. It really grates on the Enrolled Agent's ear, because it reinforces the widely held belief by many people, especially small employers, that you can have an employee on a contract just to avoid paying the employer's share of income tax, unemployment, and social security.
 
You must log in or register to reply here.
Back
Top