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Would You Work For Your Ex Employer?
By Dan Morrill
Expert Author
Article Date: 2008-04-01
Interesting question coming up as we loose a key participant in a project, while they are moving on, the company asked if the person would be a 1099 contractor to them to finish up remaining projects.
From a company view point and from the ex employee view point this makes great sense for both, projects get completed, and the ex-employee gets to make a little bit of extra money.
A 1099 contractor is not an employee of the business or businesses with which he or she works, instead he or she is an independent contractor, or consultant, who is considered to be self-employed. Being a 1099 contractor can offer extraordinary freedoms, but, like most things, it can be considered to have some downsides as well. Source: Wise Geek
Thinking about this, the employee put down stated minimums for work per hour, how much to charge for writing, white papers, and a host of other services that they previously performed for the company, at a much greater rate than their base pay. This works out great for the ex employee because they can also pick and choose the projects that they want to work on for the ex employer. They can also stipulate who they will and not work for easing some of the personality conflicts that happen in all companies. There is a lot of freedom here for the ex-employee that they would not have had if they had continued to work for the company as an FTE.
The negative side of this is that the employee will have to pay taxes on all the 1099 income at the end of the year, all social security, IRS taxes, and everything else. So they will have to save those taxes out of their new 1099 status and pay off their taxes, in some cases if they money is a lot, they might have to pay those taxes quarterly.
The other downside is if the ex-employer is poor to pay their bills, or has financial issues that will not be resolved any time soon. These kinds of issues need to be addressed at the time of the agreement. As well as any charges for late payment for the work being performed.
In all though, as long as the employee left on good terms, and there are still projects to complete, asking the employee to 1099 their work until it is finished could end up being good for both sides of the deal. As long as everyone understands what the bottom line is going to be for the work being performed. It is also beneficial if everyone has worked out base rates, pick and choose, as well as all the other associated issues with being a 1099 contractor.
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About the Author:
Dan Morrill has been in the information security field for 18 years, both
civilian and military, and is currently working on his Doctor of Management.
Dan shares his insights on the important security issues of today through
his blog, Managing
Intellectual Property & IT Security, and is an active participant in the
ITtoolbox blogging community.
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