Archive for the ‘Business’ Category

Right now I write for a few different content mills – enterprises whose main purpose is to produce content for the web. One was pretty good for a while, but it recently slashed compensation rates by more than 50%, and so what used to be a nice comfortable gig is now essentially a minimum wage job. It’s disappointing – they must have made the conscious decision to get worse, both in the relationship they had with their freelance writers and editors, and also with respect to the quality of the content they delivered to clients. Plus they hired so many writers, it’s hard to find any work at all!

One of the mills often has small tasks on an on-demand basis – if you’ve got a few minutes free, literally, you can knock off a few quick tasks. The pay isn’t great, but I’d rather earn a few bucks and practice my writing than sit for half an hour waiting for a job to come my way.

There’s quite a good post on a blog I visited recently.  It’s one of the first times I’ve seen honest appraisal of content mills, in many cases from the perspective of writers who have made their living at their craft, and can recognize the content mills for what they are. See, that’s where I was behind the 8-ball. Before getting these online gigs, I was really unaware that there were such things as content mills, or that I had any shot at writing more substantive pieces for websites and magazines, for significantly more substantial pay. Here’s a link to the post. Reading it, and the many replies, opened my eyes to two main facts:

1. Compared to other content mills, I didn’t know how good I had it, both at the beginning, when I was earning 7 cents per word, and later, when the pay was a flat rate of $20 per 300-word biography.

2. Compared to other gigs – magazines, websites, white papers for corporations, and other technical and professional-level writing – I had no idea how short I was selling myself, both at the beginning, when I was earning only 7 cents per word, and later, when I was paid just $20 per 300-word biography.

Now, there’s little real difference from other content mills, except for the fact that I’ve already passed the tests and gotten my foot in the door. I looked into signing up for some others, but the list of things I had to do to get on the list of approved writers – before being permitted to bid on any jobs – was ridiculous. Plus I’m not giving anyone any “writing samples” on a topic of their choosing. If you want to see how I write, visit the Georgia Yankee blog or visit WiseGEEK, where there are over 200 articles under my byline. (You can see a clickable list of those articles here!)

Employers are always looking for ways to save money. Since labor is usually one of the largest single costs of running a business, if not the largest, most employers look for savings there. One of the approaches some firms take is to reclassify some or all of their people as independent contractors (ICs), and pay them on what’s called a “1099” basis. This means that instead of withholding income and payroll taxes, the employer pays them 100% of their agreed-upon rate outside the payroll, and issues them a form 1099 at year’s end, instead of a W-2.

This can generate enormous savings right off the bat – 7.65% of wages are saved due to the elimination of payroll taxes. Most companies realize additional savings because independent contractors typically do not receive any employee benefits like health insurance.

So why don’t more employers do this? Because the law is fairly clear on the difference between an employee and an IC. In addition, the penalties for misclassifying an employee as an IC are significant, and all a misclassified employee has to do to get the IRS involved is file a simple form.

Put at its most elemental, if you’re buying workers’ time – like office or factory workers, for example – you cannot call them independent contractors because they’re not independent! On the other hand, if you’re paying someone strictly to perform a specific task, like writing content for your company web page or cleaning your bathrooms, and all you’re really concerned with is the finished product delivered on time, you might be dealing with an independent contractor. Since classifying someone as an IC is done primarily to save taxes, and since the IRS takes a dim view of misclassification, let’s see what the IRS has to say about it.

The IRS looks at control as the determinant of whether a worker is an employee or an IC. There are three sets of facts to determine the level of control:

Behavioral – to what degree does the company control the worker’s activities and how the job is performed? How much autonomy can the worker exercise to get the job done? Must the worker be on-site to do the job, and must the workers report at a particular time?

Financial – who pays the bills? Is the worker paid through a payroll account? Is the work done on the employer’s premises? Who provides tools and other equipment necessary to do the job? Does the employer reimburse the worker for expenses incurred?

Type of Relationship – are there any written contracts? How about employee-type benefits like health insurance, vacation pay, or retirement benefits?

These guidelines developed by the IRS are based on the Fair Labor Standards Act (FLSA). It identifies a few additional standards, such as the length of time a workers has worked for a company, and whether or not a worker can offer the same services to other companies. I think it’s clear, though, that there’s a big difference between independent contractors and employees, and that it’s usually not a good idea to reclassify an employee as an independent contractor, no matter mow much the employer might potentially save in payroll taxes!