Freelancers and Temps Transcripts August 21, 1997 10 a.m. - 11 a.m. GUESTS: ROBERT LIPMAN, EMPLOYMENT ATTORNEY HARVEY BECKER, TEMP AGENCY EXECUTIVE The following are excerpts from the viewer call-in portion of the program. Advantages of Freelancing and Temping Temp Agencies Filing Taxes as a Freelancer What Can a Temp Do if an Agency Refuses to Pay Salary? MS. GRASSO: Welcome back to the second hour of Legal Cafe. I'm June Grasso. Our focus today is on work, and this hour, work as a freelancer or a temporary. When you have to ask the question, "Who's my boss?" before going to work, there are some benefits and some detriments. But on a typical day in America, more than one million jobs are filled by workers who come from temporary services. And when you have to show up at the office every day at the same time, it does sound attractive to be able to turn off the alarm clock and stay home for the day, but there are many pitfalls to freelancing and temp work, and here to help me discuss them is Bob Lipman, an employment attorney who represents both employers and employees. Bob's been a guest on Court TV before, but this is your first visit on Legal Cafe. Welcome. MR. LIPMAN: Thank you for inviting me. ADVANTAGES OF FREELANCING AND TEMPING MS. GRASSO: Bob -- okay, now I -- while we were watching that, I said, "Oh, there are advantages to being a freelancer. You have freedom," and you said, "Advantages?" You don't think there are any advantages to be a freelancer or a temp? MR. LIPMAN: It depends what type of freelancing you're talking about. If a freelancer really is in his or her own business, they have a lot of clients, there are advantages and disadvantages. It's the same thing in terms of running your own business or working for someone else, but there are a lot of freelancers who only work for one organization. Those individuals are often treated just like employees, and oftentimes they're misclassified as independent contractors and really should be employees. MS. GRASSO: And they're misclassified for the benefit of the employer? MR. LIPMAN: Usually. MS. GRASSO: Now why is that? Because the employer doesn't have to pay certain taxes and it's up to the freelancer to pay them? MR. LIPMAN: There are a lot of reasons. There is a growing trend in the United States that large companies often have hiring freezes. I see this more and more. And those organizations often need to hire people even though they have a hiring freeze, so they say, "Okay, we can bring you on, but you're a freelancer." We love when that happens, because then those individuals come to see us, and we can sue those organizations for unpaid overtime pay, the benefits those individuals should have gotten, et cetera. Employers are motivated to misclassify workers as independent contractors because they think they can get away without paying benefits, without paying payroll taxes, but often they get caught. MS. GRASSO: Now -- and they get caught by the IRS, too, I take it? MR. LIPMAN: There's the IRS, there's state Department of Labor, there's unemployment divisions. There's a lot of government organizations out there looking for ways to increase revenues and going after those companies. MS. GRASSO: Now, what about a temp -- a temporary worker who works for a temporary agency that ends up actually paying the unemployment insurance and all the benefits. Is that person any different from really an employee who works for one company, but they're working for a temporary agency? MR. LIPMAN: Well, employees who work for temp agencies are employees. They're usually employees who are jointly employed by the temp agency and the organization they're actually working for, and there is a certain amount of flexibility and freedom in their schedules. A lot of individuals I know who are actors or actor wannabes kind of fill in as temps on the side when they're not acting. Very common. MS. GRASSO: Now, if you -- if you are a temp and you don't work -- what about a temp who doesn't work for one particular agency? What happens there? MR. LIPMAN: Well, you have an expert on the show who's coming on later about that -- MS. GRASSO: Passing the ball, okay. MR. LIPMAN: We'll let that individual talk about that. MS. GRASSO: Passing the ball. That's okay All right. And we're going to -- actually, he's going to come on right now. Since you wouldn't answer the question, we're going to go to him. MR. LIPMAN: Good. TEMP AGENCIES MS. GRASSO: We're going to add another point of view to our discussion, a job provider, if you will -- Harvey Becker's on the phone. He's president of a temporary services company with several offices in and around Philadelphia, Pennsylvania. Harvey has many years of experience in placing temps and working with all kinds of companies. Good morning, Harvey. MR. BECKER: Good morning, June. How are you this morning? MS. GRASSO: All right. Let's start with the basics. What kind of people usually come to a temporary agency looking for work? Are they the footloose and fancy-free kind that we might thing would come to a temporary agency, or something different? MR. BECKER: Well, these days, you're getting all kinds of people that are looking for temp. It's just not limited -- it used to be, you know, primarily secretarial/clerical, you know, office support types of people, but these days you have engineers, you have nurses, you have construction workers -- MS. GRASSO: Lawyers even temping. MR. BECKER: Lawyers are temping. There's quite a few. Your show is from New York, there's quite a few temporary legal services that not only do paralegals and legal secretaries, but attorneys. MS. GRASSO: Now, Harvey, let me just get to the question that I was asking Bob before, which is, basically, if you're a temporary worker, do you have to hook up with a temporary workers' service agency or placement agency in order to get work, or can you find work yourself on a temporary basis? MR. BECKER: Well, you certainly -- you certainly can find work. I mean, if you look in the help wanted sections of the papers, many times companies will advertise that they have temporary positions, but as a temporary worker, someone who doesn't want to commit to a full-time position, you can not only register with one service, you can register with many services. MS. GRASSO: Now, how does it work? What -- you have -- let's say you have a temporary working for you -- MR. BECKER: Yes. MS. GRASSO: And let's call her Susan. MR. BECKER: Right. MS. GRASSO: Okay, what do you pay of her unemployment insurance? I mean, what do you pay of her health benefits? Tell me what you do for her when she temps for you. MR. BECKER: Well, basically there's a whole process when somebody -- somebody comes to us, but just to talk about the pay, we -- that person becomes an employee of our service, so as an employee, we're obligated to pay all the payroll taxes, the un -- the workers' comp, the unemployment insurance, and, as regards to benefits, even though you see it many times or you hear it in the news that the biggest knock against temporary workers these days, because of the shortage of , you know, people, more and more temporary services are paying benefits. MS. GRASSO: Health benefits? MR. BECKER: They're paying health benefits -- MS. GRASSO: So now how does that work? MR. BECKER: -- they're paying vacation pay, they're paying sick days, they're paying holidays, so more and more temporary workers are now getting benefits. MS. GRASSO: Harvey, I'm curious. Suppose someone comes to you as a temporary and you only manage to get employment for them, let's say, three days out of every week, on the average, yet how does their health insurance work? You're still paying for their health insurance? MR. BECKER: No, you usually -- you usually don't give health insurance benefits until after a person completes a certain amount of time. There's various criteria in different services, but in some services, if a person works 750 hours, which is approximately six months for you, or 1,500 hours, which would be approximately nine months, at that time they are entitled to the various benefits. But there's also performance bonuses, there's also various types of awards that you can give people, so that all ties into the benefit package. MS. GRASSO: Okay. Stay right there, Harvey. Let's take some phone calls. FILING TAXES AS A FREELANCER MS. GRASSO: Welcome back to Legal Cafe. I'm June Grasso. We're talking about temping and freelancing, which allow you a lot of freedom from the daily office grind, but with that freedom, you often lose job security and insurance benefits. Let's take a look at the law of the land. We begin with the temporary service obligations. They usually pay the workers' wages, withhold taxes from the workers' paychecks, and they contribute to programs such as Social Security, unemployment insurance, and workers' compensation, just as any other employer would. On the other hand, independent contractors are treated quite differently -- a mixture of good and bad, if you will. These workers are self-employed. They have no job security. They usually get better pay than full-time employees, in part because they have to pay their own taxes and Social Security payments and generally must provide for their own benefits such as health insurance, so there's definitely a tradeoff there. And before we go to the phones, I want to ask my guests about how -- an independent contractor can handle the kind of paperwork that goes with having to pay the IRS at different parts, you know, quarterly maybe you might decide to pay them and the different kind of things, health insurance. Does it get complicated if you're a freelancer or an independent contractor? MR. LIPMAN: Not if you have a good accountant. MS. GRASSO: So you have to hire somebody to help you, then. MR. LIPMAN: I think most people would need to do that. There are some computer programs now that tell you what quarterly payments to make, but, believe me, the IRS doesn't make it easy. MS. GRASSO: Okay. Doesn't surprise me. WHAT CAN A TEMP DO IF AN AGENCY REFUSES TO PAY SALARY? And let's go to our phones now. Benessa from Texas is on the line. Good morning, Benessa. Q Good morning, June. MS. GRASSO: Hi. Are you a temp worker or are you thinking about it? Q I've been at temp agencies for the last couple years. MS. GRASSO: Okay, and how's it working out? Q Off and on. It's pretty good as far as getting employment. MS. GRASSO: What kind of temp work do you do? Q Anything from clerical to telemarketing. MS. GRASSO: Oh. And now tell me what your question is. Q My question is I was working with like three or four temp agencies at one time, and what happened was one of the temp agencies that I had initially gotten full-time employment from on a couple of occasions, they sent me to this smaller firm for employment, and then about four weeks after working with the company, four to six weeks, they terminated me from the temp agency, stating that the temp agency refused to pay them because of the lack of quality of my work, and I've never had a complaint before. So at this time, even still the temp agency still refuses to pay me or send me out on any other job assignments. MS. GRASSO: And that's a temp agency that you'd worked for for quite a while? Q Correct. I have even gotten full-time employment through them a couple of times, along with excellent recommendations. MS. GRASSO: And, Benessa, have they explained to you what they said the problem with your work was? Q They said the employer was unhappy with my work and therefore they're going to let me go without pay, so therefore the temp agency is not going to pay me, but from what I understand, I am employed through the temp agency, so they should be liable to pay me. MS. GRASSO: It sounds -- all right, let's go to Harvey, who handles these kinds of cases, who handles -- has a temporary service in Philadelphia. Harvey, is -- first of all, the employer deciding you're not going to pay after four weeks the temp service agency because they don't like the quality of the work, that doesn't seem right. MR. BECKER: Well, that's absolutely not right. I mean, they can refuse it, of course. I mean, the client company could refuse to pay us, but then that would turn into a legal problem between us and them, but we, as the employer of the temporary worker, we have to pay that person. MS. GRASSO: Exactly, but now what does she do? Because Benessa obviously worked for this company for a long time and was happy with the relationship until now they refuse to pay her. What should she do? MR. BECKER: Well, we -- if the temp service refused to pay her, I guess your legal expert could answer that, but she would, you know, of course make a -- you go and, you know, register a complaint with the Department of Labor here in Pennsylvania, and she has to be paid for the amount of time that she put in. MS. GRASSO: I think the Department of Labor -- is that where she would go, do you think, Bob? MR. LIPMAN: Well, there are state Department of Labors, there's a federal Department of Labor. Benessa, I would be outraged, if I were you. I'd call the Better Business Bureau, I'd call the newspapers. If they're not going to pay you for time that you didn't (sic) work, that's clearly unlawful. MS. GRASSO: And, Benessa, let me ask you this. You said you had several temporary agencies. Are you able to work with the other ones at the same time? Q Yes. MS. GRASSO: Okay. So -- but -- and -- so what you should do is make a complaint about this agency and call up. I think, you know, where it's something like this, the Department of Labor in your state, but as Bob mentioned, you should make some phone calls, because it seems unfair, especially since you worked for four weeks. If your work wasn't good enough, they should have told you after the first couple of days that it wasn't. MR. LIPMAN: Can I ask Benessa a couple of questions? MS. GRASSO: Sure. MR. LIPMAN: When you -- you said you were working for the temp agency at one stretch, one agency for a long period, is that right? Q Correct. MR. LIPMAN: Were you paid hourly? Q Yes, I was paid hourly. I was paid over $6 an hour. MR. LIPMAN: Did you work more than 40 hours in a week? Q Yes. MR. LIPMAN: Did they pay you time and a half for that work? Q I don't believe so? MR. LIPMAN: Yeah, that's a problem that many temporary employees face, especially when they work through an agency. That clearly is unlawful, and you can call up the United States Department of Labor or call up a plaintiff employment lawyer, and you can sue that temporary employment agency and possibly the organization that you were working for for overtime pay, so if you were getting $6 an hour, for those hours over 40, you should have been receiving $9 an hour, and many lawyers would be willing to take that case in an -- because even though there's not much money, maybe, involved, lawyers would be willing to take that case, because they would try to turn it into a class action. Our firm has done many of these. MS. GRASSO: All right. So, Benessa, you have some phone calls to make after you hang up from us. Good luck with that, and we'll give you some direction there. MS. GRASSO: And let's go to our next caller, Merlean from Michigan. Did I get your name right? Q Yes, you did. MS. GRASSO: Oh, great. Are you temping or freelancing? Q No. I'm calling in regards to my son-in-law. MS. GRASSO: Okay. Go ahead. Q He worked for a temporary agency for about three months. After he worked for the first month, he hasn't gotten paid, so how does he get his money from the temporary agency? He went to the employer that he was working for. They indicated that he'd turned in all the time slips and everything he needed, but the temporary agency never paid him. So, you know, when you work for a temporary agency, they lock you into a contract for six months, you can't work for that company if they send you to them, but the company got him released from the contract, but he still can't get his money from them. MS. GRASSO: And for three months he hasn't gotten paid. Three whole months. Q He worked for three months, and six weeks of the three months he hasn't got any pay. MS. GRASSO: Okay. Harvey Becker, another case of -- does this happen often? We've had two callers this morning along who haven't gotten paid from their temporary agency. MR. BECKER: Well, June -- MS. GRASSO: I know it doesn't happen in your temporary agency, Harvey, but does it happen -- MR. BECKER: I guess, like anything else, it can happen, and there's probably, you know, some shoddy temp services out there, but, again, it seems to me it's the same question that your previous caller had asked, and Bob Lipman answered it. Again, it becomes a legal problem between the temporary employee and their employer, the temporary service, and you'll have to go to the Department of Labor and Industry or whoever is the appropriate, you know, governmental authority in that area, and file against them. MS. GRASSO: Okay. Merlean, we had said the department of labor. Who else did we say? Department of labor in their state and also the labor -- the Department of Labor, the U.S. Department of Labor they can complain to. MR. LIPMAN: Unfortunately, the United States Department of Labor is only concerned about the minimum wage and overtime, so if your son-in-law was not working more than 40 hours in a week, he's only going to get minimum wage if he goes to the feds, so I would go to the state department of labor or an attorney who can sue him for breach of contract or under the state wage-hour laws. MS. GRASSO: All right, because he certainly was entitled to that pay. Thanks so much for calling, Merlean.