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Hi Everyone,
You may be aware that the Government may introduce a legislation that will affect many contractors within the construction industry. It’s simply a consultation at present but the legislation could be out by April 2010.
They believe that many construction workers operate as self-employed even though the underlying characteristics of the relationship they have with their client indicate their status as being that of an employee (and this is what the legislation will target).
Obviously as self-employed there lies a financial incentive in operating in this way as you can avoid paying Employers NICs (12.8%), thus the Government feels hard done by and wants all construction contractors to be deemed as employees for tax purposes (this would mean paying PAYE and NICs on all income received) UNLESS they meet one of the3 criteria below;
1. Provision of plant and equipment - the contractor provides he plant and equipment required for the job they have been engaged to carry oit.
2. Provision of all materials – contractor provides all materials required to complete the job
3. Provision of other workers – contractor provides other workers to complete the job
It’s safe to say that the legislation is likely to have a negative impact within the industry. Let me know your thoughts on the matter. . .
 

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Truthfully I have been waiting for this to happen for a long time. I am tired of companies taking advantage of the workers by treating them as independent contractors and paying them on an employee wage scale. This may hurt some of the folks who work this way, but there are very distinct lines that have been in place for decades on how this is to be accomplished. I think it is the employers who are mostly taking advantage of the lax enforcement. I feel most of the guys are forced into this type of a working arrangement because it is either this or unemployment (or finding a new job/career). The employer is trying to make more profit by making the individual worker take the tax hit.

By paying the employee marginally more in compensation the employer is able to dissolve all of their tax burden on this worker. At the beginning the worker sees a big increase in pay. Usually going from something like 15/hr to 23/hr. But they soon find out that the extra 8/hr is sucked up in all of the fees, insurance and other costs of running a legitimate business. And then they have the employer telling them where to be, when to be there, how to do the job and providing equipment to do the job. As per IRS rules, this is classified as an employee.

I feel this new enforcement will both help and hurt the little guy trying to make a living. It will definitely hurt the employer trying to take advantage of the worker this way. I don't feel sorry for this employer because they have already made their illegal profit off the backs of the hard working man. But it might hurt the little guy just trying to make it by. He will now have to get all of the equipment he requires to do the work needed. If you are a carpenter or a residential plumber it may not hurt to much. But if you are an excavator and use your companies large, expensive equipment it may put you out of a job. It will make companies more lean, especially if they are taking large profits that use to be funneled back into the company for operation purposes.

Like I said. This has been coming and it should have happened a long time ago. If you play by the rules nothing will change. If you don't, well, prepare for change (and fines).


FYI - I am a self employed cabinet maker and have been running on my own for a decade. I have been taken advantage by companies in this exact manor. They claim me as a IC and pay me 15% more than they would have if I was an employee. I lost all my benefits but retained all the burden of complying with their rules.
 

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Leo - I think the gist is that your customer will have to declare you (contractor) as an employee. I don't believe this is about the sub-contractor/employee game played by contractors with their employees.
 

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I won't repeat everything leo said but I am with him on this one. I think its about time they address the 1099 sub contractor game and put an end to this unfair and deceptive practice.

It cost the gov't lost tax revenue putting a grater burden on those of us who want to play by the rules

It will make for better employment conditions for workers.

It will make it easier for those of us who pay employees as employees to compete

It will provide a safer work place, by forcing the employer to carry workers comp, another big overhead expense they avoid paying. That will benefit both the workers and the person hiring the construction company
 

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Leo - I think the gist is that your customer will have to declare you (contractor) as an employee. I don't believe this is about the sub-contractor/employee game played by contractors with their employees.
Mike,

I think it will force the customer to take some responsibilty, and not automaticaly hire the lowest bidder.

I know plenty of customers who are wise to the game and use it to thier advantage.They want to provide all the material to avoid any mark up, they want to pay hourly, and they think that $20/$25 an hour for a guy on craigslist is a fair wage
 

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I'd say the gov should stay the F**k out of it.

What need is there for this if the contractor meets the IRS test of independent contractor???????

You either are legal self-employed or not, end of story.

This is a handyman issue at its finest is all it is.
 

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I can't see how the government can possible claim the consumer as the employer. That would be such a drastic change in policy it would be unfathomable. It would also make the consumer have to pay all the taxes, get all the permits and make us just a laborer. I hardly think that this is something the average consumer is expecting when they hire someone to do the job they are paying for. I just can imagine a change this drastic. It would make just about every single citizen an employer, needing to collect taxes and pay for benefits. It will never happen.

Is there any other country that has it setup this way Mike?
 

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It will provide a safer work place, by forcing the employer to carry workers comp, another big overhead expense they avoid paying. That will benefit both the workers and the person hiring the construction company

Although I carry WC on myself and my employees, it is not a requirement in Texas.
 

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All the guidelines and rules are there already in place for a legitimate contractor.

The only place I see this apply is the douche bag handyman fly by nighter hack who works T&M.

In that regard a douche with no business account, no registered entity.. no nothing... doing side work for pay me $20 an hour and you buy the materials, I'll go with you to Home Depot or I go myself with your $1000 home depot store credit and buy the stuff and install it -- falls into the reason for this.

If you're a homeowner hiring a douche bag "handyman" and paying him by the hour and directing the work and the dude isn't licensed or insured or running a legitimate business then its not a very big step to be declared an employer/employee relationship.

This isn't any different then homeowner hiring a douche and he falls off the ladder and sues the homeowner.

However as I said if you're legitimate and pass the IRS tests of non-sub and have all the rest of the proper business items in place this crap by the government is un-called for.
 

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How about instead of this legislation we just get the powers in place to actually do their job.

Maybe the contractor licensing board could actually grow some balls if one of these hacks gets discovered and fine the sh*t out of him?

Everything is already in place. We have the IRS, we have workers comp laws, employement labor and fair wage acts, building depts etc...

How about the existing gov A-holes start enforcing the rules and wiping up the floors with these hacks and we wouldn't need anymore legislation that will make the legit contractors lives any harder?
 

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I keep reading posts on this site degrading handyman as a group and I finally have to say something about it. The problem is not with the "Handyman" it is with the lowballing whatever you want to call him. While at times I get frustrated when I do handyman work, because of the bad rep handymen get (It always amazes me that I have spent 35 years learning every part of the house and how to build and repair it, I run an up and up business, I have tools for every part of the house and yet because I am a "handyman" I should be paid $10 an hour), in fact I will match my overall skills and knowledge across all trades with any single trade contractor on this site.

I think maybe people need to place the blame where it belongs and it is not with a handyman. it is with the individual who passes themselves off as something they are not. I ordinarily do not take offense with things that are said on this site but Mike I think your comments against the "douche bag handyman fly by nighter hack" were out of line. You want to take Handyman out of thet line I will agree with you 110% but I don't trash other trades because they have "douche bag fly by nighter hacks" and they all do and I would expect people on a professionals board to extend the same courtesy.

And while I am on my soap box I will make one other observation. This is a professionals board but lately it has lost some of its professionalism in my opinion. It seems like there has been a big shift toward CL complaining and borderline if not actual racial bashing. It is time to get over it. The facts are that CL will always exist and there will always be people of all nationalities out there trying to hire or hire out at the lowest price.

When this board is on its game it is a pleasure to follow and learn from. There are alot of very talented craftsmen here. However when posts start or turn into a whining session or worse it is embarassing to watch.

You can slam me if you want, I don't post much but I have been around for awhile and I have been in the trades for 35+ years and I hate to see a group as talented as this one turn into a joke. Instead of complaining about CL lets see some posts on constructive ways to address the CL problem and how we as professionals are addressing it. If I want to see stupid CL posts all I have to do is look on CL, I don't need to come here to see them. Instead of posting fake jobs and then getting a laugh from it lets figure out ways to address the effect the economy has on us and what has been working for us. And lets get back to professional behaviour in how we present ourselves on this board. And my pet peeve for today, lets stop lumping certain behaviour on a certain trade.

Remember alot of non professionals read this board, I had someone comment the other day that they were reading a post and found it hard to believe that he was reading posts from professionals.

Thats my thought for the day. It has been in the back of my mind for awhile and while you may or may not agree I felt it needed to be said.

And by the way, I use CL as just another tool in my marketing toolbox. It is what it is but if done right can be another source of work, and not lowball work.
 

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And while I am on my soap box I will make one other observation. This is a professionals board but lately it has lost some of its professionalism in my opinion. It seems like there has been a big shift toward CL complaining and borderline if not actual racial bashing. It is time to get over it. The facts are that CL will always exist and there will always be people of all nationalities out there trying to hire or hire out at the lowest price.


Oh,so very true.
I have respect for anyone trying to make an honest living peddling their knowledge , experience and talents,but I believe the bashing is a combination of boyish teasing,frustration,and crowd mentality.

I know a lot of the "bashing" is done in fun and won't always be taken lightly.

But you have to admit,by reading a sampling of some Craig's list ads that some is well deserved.People will hire cheap and complain that the end results were not favorable.

I believe that a lot of the bashing is by professsionals that are also frustrated with competing with these "low ballers" who give the whole industry a bad name and they should be verbally spanked.

Just don't put yourself in the categorgy of the low ballers.
 

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There is nothing wrong with CL. I use it all the time. I don't get alot of jobs from CL but it's FREE (here). CL is not responsible for what idiots put on their list. If you don't like CL don't use it. When I see a boot legger advertising on CL I send the ad to the state investigative office for the licensing authority. I have done this several times and the ads usually stop after a week or so. It's illegal to advertise to do business in my state if you arent licensed to do business. If it isnt illegal to do business in your state without a license..I APPLAUD YOUR STATE. I personally feel that people that hire otheres to work for them can accept the responsibility to police themselves. It's not a simple issue...and there are good arguements to both sides.
 

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There is nothing wrong with CL. I use it all the time. I don't get alot of jobs from CL but it's FREE (here). CL is not responsible for what idiots put on their list. If you don't like CL don't use it. When I see a boot legger advertising on CL I send the ad to the state investigative office for the licensing authority. I have done this several times and the ads usually stop after a week or so. It's illegal to advertise to do business in my state if you arent licensed to do business. If it isnt illegal to do business in your state without a license..I APPLAUD YOUR STATE. I personally feel that people that hire otheres to work for them can accept the responsibility to police themselves. It's not a simple issue...and there are good arguements to both sides.
This sums up nicely why I like Alaska and why it's a place I love to visit. There's a sense of personal responsibility and personal accountability in the nice people that call Alaska home. Bravo Zulu sir.
 
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And while I am on my soap box I will make one other observation. This is a professionals board but lately it has lost some of its professionalism in my opinion. It seems like there has been a big shift toward CL complaining and borderline if not actual racial bashing. It is time to get over it. The facts are that CL will always exist and there will always be people of all nationalities out there trying to hire or hire out at the lowest price.


Oh,so very true.
I have respect for anyone trying to make an honest living peddling their knowledge , experience and talents,but I believe the bashing is a combination of boyish teasing,frustration,and crowd mentality.

I know a lot of the "bashing" is done in fun and won't always be taken lightly.

But you have to admit,by reading a sampling of some Craig's list ads that some is well deserved.People will hire cheap and complain that the end results were not favorable.

I believe that a lot of the bashing is by professsionals that are also frustrated with competing with these "low ballers" who give the whole industry a bad name and they should be verbally spanked.

Just don't put yourself in the categorgy of the low ballers.
I certainlly understand frustration with Craigs List but in reality I have a feeling that that some of the problems people are having may be as much problems in how they run their business and how they market their business. Craigs is certainly an issue but going on a public forum and constantly bitching is time that might be better spent in improving one's marketing, advertising and overall way of doing business. It is a whole new world out there and I doubt you are ever going to see business like it was. I know I am old enough to remember the early 80s when in our market unemplyment was pushing 18% and mortgages were about the same. I have a feeling that alot of guys have only known the boom market and they will have to work hard to figure out this new market.

If you are going to survive you will need to not only be good at what you do but you will have to be good at marketing that to your customer base using all kinds of tools and methods. In addition to the general home improvement business which I am slowly getting out of in favor of niche markets I also own a marketing company and we spend alot of time developing marketing programs (and I use programs specifically because you can't rely on just one thing) for small and medium businesses and I see how tough it can be for small businesses to figure it all out.

That is why I think that this forum can be such an asset to guys who want to improve their business and in fact has been and is. I would hate to see that change any further.

Just keep in mind that there is a sucker born every minute and there will always be people who buy the lowest price and people who will sell to them. As a professional we can't change that nor should we care because those people are not the people we want to do business with. Lets spend our time here helping each other better our businesses and figuring out ways to go after the type of customers we want.
 

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I believe that a lot of the bashing is by professsionals that are also frustrated with competing with these "low ballers" who give the whole industry a bad name and they should be verbally spanked.
That is the reason for most of my frustration.
 

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Yes I agree with that frustration of the low ballers.

Try to explain to a client that Joe Blow who wants to charge him $100 to paint three rooms in your house. While you have a painting company and you are going to charge them $2300 to do the same job. The client only sees the price discrepancy and ends up calling the legitimate contractor a rip off artist. But then when the job gets done by Joe Blow and is sucks the client gets upset that the job isn't done to their satisfaction. Now it doubly sets us up as rip off artists. They screwed themselves by going with the low baller who has no insurance, no license, no overhead and likely, no morals.

Because we have all the necessary requirements we are at an unfair advantage price wise. But we will usually give a warranty and if we get hurt on the job we aren't going to sue the HO.
 

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Yes I agree with that frustration of the low ballers.

Try to explain to a client that Joe Blow who wants to charge him $100 to paint three rooms in your house. While you have a painting company and you are going to charge them $2300 to do the same job. The client only sees the price discrepancy and ends up calling the legitimate contractor a rip off artist. But then when the job gets done by Joe Blow and is sucks the client gets upset that the job isn't done to their satisfaction. Now it doubly sets us up as rip off artists. They screwed themselves by going with the low baller who has no insurance, no license, no overhead and likely, no morals.

Because we have all the necessary requirements we are at an unfair advantage price wise. But we will usually give a warranty and if we get hurt on the job we aren't going to sue the HO.
That is the name of the game. You may not like it but that is the way it works. Do you really want to work for a customer who is that easily swayed by the price. If not then present yourself as a true profesional in appearance, knowledge, marketing and you will attract the type of customer you want. Will it be asy? NO. You will need to use every tool in your selling toolbox but in the end it will pay off. Thee is no other way anymore.
 

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I don't mind competition. But I can't compete with someone who doesn't have the basic requirements to run a legal business. Insurance, registration/license. and a basic view of their value of their time.

Most of these guys are working already, their benefits are paid for by some other company. They run under the radar with no license or insurances. They are likely doing only smaller jobs to limit their overhead. But even doing the small jobs and screwing up or running when the low ball money they charged for the job runs out gives us all a bad name and makes it harder to get jobs in the area.

Now after they screw up and we have to go in and fix up after them our prices have to be much higher to figure out what was screwed up and most likely remove it. Just never ends up looking like we are the good guys and these guys certainly aren't helping us.
 
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