Three years ago, I got hired as an independent contractor for a small company where we had a lot of contact with the owner.

Then, my contract expired and things started get a little funny from there.

  • My boss didn't clearly lay out any terms after that point. He only stated that I could keep working for his company.
  • I got paid exactly the same way when I was officially a contractor (same hourly rate, same stipend)
  • I later found out that every one of his "employees" also works under a 1099, even if they have no longer have a definite contract with him. Nobody paid taxes for SS, insurance, etc.

Over a year later, he started not liking my performance (he felt I was working too slowly), but instead of firing me, he decided to pay me a fixed rate, and only give me small projects that maybe pay me monthly in the low 100s. That way he felt safer not taking the risk of paying me for each hour I worked. Any time he changed the terms on me, he did not have it written out on paper.

He also proposed an alternative. He wanted me to work for an "evaluation period" where I worked 30 hours a week, for $800 a month (this is below minimum wage in my state by the way), and THEN after he saw enough improvement, I'd work for base salary. He compared it to an internship. I found it ridiculous, that he would offer this idea after working for him for three years. It seems like a huge step backward.

I know I can simply look for another job, but after 10 months of unsuccessfully getting a job some place else I am stuck between a rock and a hard place. Realistically, my only options are to quit and endure having no job at all or work for him. I'd rather milk this job for all it's worth.

My questions:

  • Since he is the one setting the hours and when/how much I get paid, does this make me an employee?
  • Does he have any legal right to treat it as a low-pay internship, or is his proposal in clear violation of employee laws?
  • It looks like you're in the US; you should mention in what state, as laws in the US are somewhat state-dependent. May 31, 2012 at 23:07
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    I'm reading this and actually getting angry on your behalf. Get out now, get out fast. Keep looking for a new job. If you need the current one to pay the bills, do your best to endure but I'd get out at the first opportunity that presents itself...
    – pap
    Jun 1, 2012 at 8:09
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    Considering that my contractor rate was $15 an hour (about 30% below the median for a salaried worker with the same experience in my location), I really will get out of there as soon as I can.
    – Chris C
    Jun 18, 2012 at 22:47
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    When a court says so. I'd talk to a lawyer, because if he kept giving you work, it could be a court would say both parties should be continuing by the same contract terms as there is no written agreement to alter it.
    – Andy
    Jul 22, 2017 at 14:37

2 Answers 2


Since he is the one setting the hours and when/how much I get paid, does this make me an employee?

I'm assuming you're in the United States. It sounds like you and your co-workers are almost certainly employees for tax and social security purposes, not 'contractors'.

Any one of you would probably have a good chance of forcing the employer to retroactively pay the 7.5% social security taxes that he should have been paying all along instead of you.

The IRS and Social Security Administration will start this process on receipt of an SS-Form 8.

Here in Texas the Texas Workforce Commission might help you with stolen vacation pay, but that's something of a long shot if there is nothing in writing.

Does he have any legal right to treat it as a low-pay internship, or is his proposal in clear violation of employee laws?

He is possibility violating the federal minimum wage laws, the Federal Department of Labor can help you determine if this is the case.


I'm assuming you're also working under a 1099 and managing your own taxes/filing quarterly.

If you're working as an independent contractor, then you're under your own responsibility to manage your pay. You're not an employee unless you're receiving a W-2.

I suggest getting everything in writing from now on. If he absolutely will not allow you to work for a higher rate, you will have to make that decision for yourself.

If you work on a pay-for-deliverables basis, that essentially removes most of your protections. Whether you take 1 hour or 100 hours to complete a task is up to you.

In any case, I find this insulting. This guy is absolutely taking advantage of you. Keep trying to find alternative employment. I suggest vworker.com

  • 5
    Not exactly true. There are cases where if a company "treats" a contractor like an employee then the government thinks they are an employee. This is to prevent companies from hiring all "contractors" to get around tax laws. Jun 2, 2012 at 17:34
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    This is true for hourly contractors, which OP used to be. It is not true for pay-by-deliverables contractors, which the OP seems now to be.
    – Codeman
    Jun 3, 2012 at 8:42

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