Can Top Echelon Contracting help me find contractors?
Top Echelon Contracting does not recruit and is not involved in the placement process. We serve as the Employer of Record for contractors AFTER they have been placed by an independent recruiter.
What is the difference between paying a worker on a 1099 versus a W-2?
When a worker is paid on Form W-2, the employer withholds the necessary employee taxes, including Federal Income Tax, State Income Tax, and FICA (Social Security and Medicare). The employer also pays the necessary employer taxes such as FICA (Social Security and Medicare), FUTA (Federal Unemployment Tax), and SUI (State Unemployment Tax).
Workers paid on Form 1099-misc do not have taxes withheld from their pay, so they must file and pay the appropriate taxes themselves. The company does not pay the employer share of taxes, and the worker does not have access to the company’s unemployment, Workers’ Compensation, or benefits [medical, dental, vision, 401(k), etc.].
The IRS and state agencies have seen their tax collections suffer due to workers misclassified as 1099 independent contractors and are cracking down with more audits and heavy penalties. Therefore, it is imperative workers are properly classified per the IRS guidelines. Based on those guidelines, less than 1% of our contractors qualify for the 1099 independent contractor (IC) classification.
What is the FLSA and how does it apply to our contractors employed through Top Echelon Contracting?
The Fair Labor Standards Act, or FLSA, encompasses a number of wage and hour regulations, including the minimum wage and overtime regulations. The FLSA requires that most employees be paid an overtime premium (one and a half times the regular rate) for hours worked over 40 in a week. (Note that the state of California requires overtime to be paid when workers work more than eight hours in a day).
In situations where the “Temporary Personnel” (contractors) are “Computer Related Professionals” as defined by the Fair Labor Standards Act (“FLSA”), we can pay an hourly wage of not less than $27.63/hour (California requires a higher rate, adjusted annually.) without having to pay the overtime premium. Otherwise, the only way we can avoid paying and billing the premium for overtime hours worked by contractors is when they fit the Department of Labor’s definition of an exempt class (Executive, Administrative, Professional, Outside Sales) as determined by the FLSA, and we pay them on a salary basis. By definition, “salary” means a guaranteed rate of pay regardless of the total number of hours worked. Therefore, this “weekly” option would require us to invoice the client on a weekly “flat rate” basis for the same amount each week regardless of how few or many hours a contractor works. Note: This holds true even when the contractors are clearly professionals (Civil Engineers or Nurses). If we pay a professional on an hourly basis, then they are not exempt from the FLSA’s overtime provisions (no matter how much money we pay them). The sole exception to that rule is “Computer Related Professionals,” as described above.
For more information about the FLSA and Federal and State wage and hour laws, click here.
How does the payroll cycle work, and what is my company’s responsibility?
Top Echelon Contracting employees will complete an online timesheet by the end of day Friday. Then they must have it approved by a representative from your company who can verify the hours indicated on the timesheet. Your company is invoiced based on the timesheet, so we cannot process it without an approval. The payroll deadline is each Monday by 11:59 P.M. EST. It is important for employees to have their timesheets submitted & approved by this deadline each week.
After payroll is processed, we will generate and send an invoice to your company. The invoice must be paid within the payment terms that have been agreed to by you and Top Echelon Contracting. Your company’s only responsibilities in this process are to approve the timesheet and pay the invoice.
Are benefits available to contractors?
Top Echelon Contracting offers the following benefits to employees who work an average of at least 30 hours per week: medical, dental, vision, life insurance, and 401(k). Top Echelon Contracting employees can receive these benefits on the 1st of the month after they have worked for 30 days.
We offer four different healthcare insurance plans through Aetna. All four plans are compliant with the requirements of the Affordable Care Act (ACA), the healthcare reform law often referred to as Obamacare. For more information, go to our Contractor Benefits page.