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Today (7/20/2010) while trying to reopen my unemployment claim, my local IDES (Illinois) office told me I am now considered an employee of the company I’ve been doing some freelance/independent contractor work for (I’ll call them company B) while receiving unemployment pay.
I was laid off from company A early December 2009 and have been collecting unemployment. While looking for a job, I was approached by company B in January 2010 to do some freelance design/illustration work. A friend of mine at company A mentioned to someone at company B that I was out of work and might be interested in some freelance work during my continued search for full time employment.
I have done about 37 days of work (some days a couple hours, some a full day) for company B since January 2010. I have always reported every penny I earned while “certifying” via telephone biweekly as required. When I made above the IDES limit in a week, I received less unemployment pay. About 3 times in 2010 I made enough during a week to “knock me out” of unemployment. When this happened, I waited until the freelance project was over and then went back to the local IDES office to reopen my claim. All this while conducting my permanent full time job search.
When I do work for company B (located in Ohio) I work out of my home office, the same one I use to perform my everyday job search tasks. I really do not know if company B will ever call me again to do another project. I always do, however, try to do the best job possible while using all professional standards in hopes that company B will call me again. I guess I would be thrilled if company B gave me so much work that I never need to receive unemployment again! Actually, my goal is to have a full time position as an employee at some company as soon as possible. Company B contacts me (and I have solicited them a few times) when they have a project and I have full freedom to accept or deny the project. I do think if I kept turning down projects, company B would not call me anymore. My local IDES office said that constitutes me as being an employee of company B. I set my own prices. I base my prices on a range I assume to be competitive with other freelancers. When I told my local IDES office that I fear I might not be considered for more projects from company B if I charge too much (gray area what ‘too much” is), they said “ah ha” that makes me an employee. I was also told that if company B sets a deadline, that makes me an employee of theirs. I’m confused here because I don’t know who would ever give out a project without a timeframe of some sort. If company B gives me a timeframe they need the work completed in (perhaps a design/drawing for one of their presentation dates), I alone decide if I can make that work. If I decide I can’t, I decline the project. I was also told by IDES that if the person at company B directs the project and has me make revisions, that he is considered my “supervisor” and that I am an employee. I am shocked if all this is fact. I do not consider myself an employee of company B in any regard. According to this IDES office, this freelance work along with me being on unemployment, deems me an employee and NOT an independent contractor.
I am under no retainer or contract with company B of any kind. Company B does not withhold any taxes or social security from any payment made to me. Company B will issue a 1099 form for any work I performed in 2010. My local IDES office said this company B is taking advantage by not paying taxes, etc.... and that they know just what they are doing. I was asked to fill out a questionnaire to determine if I am an employee of company B. When I was told I was in fact now an employee of company B, it was also indicated that a report will be made and IDES/IRS will contact company B for any penalties.... including any and all other cases similar to mine. I asked my local IDES office to not accept my papers today and not to reopen my unemployment claim today. This was granted. Certainly, company B would immediately wash their hands of me with such inquiry by the government... weather right or wrong.
My local IDES office also told me I have not been working for company B as an independent contractor, but as an employee. I’m confused because I was a freelancer/independent contractor/sole proprietor of my illustration/design company using my name for many years prior to my employee position at company A. During that time, I paid my own estimated taxes, etc. and used my social security as my tax ID# as directed by my accountants (some do it that sole proprietor way, some set up a company with it’s own tax ID#).
The creative field is big on freelancers. It is somewhat difficult to find full time employment positions. I am determined to find one of these positions. The unemployment checks have been invaluable to my family while I continue to turn over every stone to find a job. I really thought taking a freelance job here and there would be the right thing to do, even when it temporarily bumped me down, or out, of unemployment payments.
I feel I’m in a catch 22. Forget company B and freelance work to receive unemployment during my job search... or forgo unemployment to accept any possible work that MIGHT arise from company B while searching for a permanent fulltime job. Company B work may or may not continue, and overall has not been even close to my unemployment pay. If I try to continue with unemployment AND company B, IDES/IRS will go after company B. For that, employee or not, in the end company B will see me as the enemy and all opportunity lost.
I read that all states allow workers already on unemployment to reopen an unemployment claim at the end of a temporary job or freelance job (that temporarily knocks them out of receiving compensation due to earning too much wages). I really thought I was doing everything by the book, not hiding a thing!