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Comment by jasode | Hacker News Reader

>Contractors love the good pay and engaging work in Google's data centers. They resent that Google and its staffing firm, Modis Engineering, make them quit every two years.

>[...] But those two-year contracts are written in stone. Workers like Wait are not usually allowed to apply either to renew their contracts or to do the same job as a Google employee. If they want to keep working in the same job, they have to leave the data center for six months and then come back and apply again — but neither Google nor Modis will tell workers why.

>[...] Google likely requires the six-month leave due to federal employment law, Barbara Figari, an employment attorney in California, told Protocol.

Yes. All companies got rattled by Microsoft losing their lawsuit with permatemp contractors in 2000: https://www.google.com/search?q=microsoft+contractors+lawsui...

Before the Microsoft settlement, I was able to sell my services directly to the client company as a 1099 freelance contractor because I did not want to be an employee. But after that, all companies got paranoid about contractors and I then had to go through a middleman bodyshop as a "fake" W-2 employee. The programming bodyshop then skims a fee from my hourly rate to provide a "lawsuit shield" for the client that wants to pay for my services.

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I also had to engage with this bodyshop arrangement. Heard a fellow contractor referring to it as "paying the pimp", which I guess has some similarities.

It's worth noting that you can usually contract directly with a company as long as you maintain scoped part-time contracts with multiple companies, instead of a single open-ended long-term contract with a single company. It's true that independent contractors are somewhat disadvantaged by this whole setup, but we should also recognize that voluntary independent freelance contracting of this type is quite a privileged position and it's good our desired style of work isn't being used to undermine the rights of W-2 employees.

Isn't it? Isn't that what the "bodyshop" is for? To protect the dynamic the buyer exploited previously, but now with a rent-seeker in the middle? It doesn't seem like the workers on either end are better protected as a result.

Honestly asking.

You're mostly right, although the way I see it is this: there are a few subclasses of independent contractor. At the top are people with high hourly rates who have niche skillsets and want to work on their own with minimal involvement in the company with which they have a contract. In the middle are the perma-temps involved in the Microsoft lawsuit or at H-1B shops, usually fairly well-paid but lacking many benefits like stock grants. At the bottom are the precarious underclass of people outlined in the article who make close to minimum wage. Then of course you have the gig workers (Uber, Instacart, etc.) who are paid piecemeal.

It used to be the people at the top could have their cake & eat it too, where sometimes they'd have long open-ended contracts with a company directly - maintaining independence but also getting a steady paycheck. Now they have to shack up with one of these bodyshops that gets a fat cut of their labor, which disincentivizes the setup. I was certainly glad to get out of it; the whole operation felt shady from start to finish. Politically, this class of people used to be available as cover for the entirety of the contracting workforce. Did lawmakers really want to rob these All-American Mavericks of their Freedom? Anything that further disincentivizes the mock W-2 job route is a good thing IMO. The current situation of course is not sufficient but it's better than the free-for-all it used to be. I guess you could say it has hightened the contradictions.

Some might say given the reality of these distinctions within independent contractors, we should segregate protections based on income. I don't think that'll work. Any policy targeted at helping only those of lower means will quickly become a policy to be watered down further and further and further as all the incentives in the system are aligned toward greater exploitation. By including all classes of independent contractor in any legislation, we make it stronger against attacks that would land hardest on the worst off. If that shuts down some avenues of employment for people at the top, well, so be it. I don't think scoped contracts will ever go away.

Worth noting this entire thing is to some degree a sideshow of the larger debate about health insurance and how it's tied to employment. If medicare for all were passed, a lot of these issues would just go away.

> health insurance and how it's tied to employment

Without getting too political, I really feel like untying health insurance from employment would transform the labor market and encourage far more entrepreneurial endeavors. People could take more risks if they didn't have to worry about losing healthcare coverage.

There are obvious tradeoffs involved, but I really never see this aspect considered in public debate. Making healthcare independent of employment really empowers people to do their own thing.

> There are obvious tradeoffs involved, but I really never see this aspect considered in public debate.

It was a big aspect in 2009/2010 when ACA was being passed.

The reason people want insurance tied to employment is because they benefit from lower premiums because their risk pool experiences less healthcare costs than the general public.

If everyone was dumped into one marketplace and risk pool, then the insurance premiums would have to rise for those working in white collar businesses who had previously been able to enjoy lower premiums since the nature of employment as a requirement precludes many sick people experiencing healthcare costs.

So when people complain that ACA increased their healthcare costs, what they are actually complaining about is having to now share risk pools with sicker people who previously were not getting healthcare period.

The optimal way this would work is if everyone was dumped onto healthcare.gov, and they picked whatever health insurance plan they want, and then naturally the premiums would balance out over time so that the costs are spread amongst the whole population.

Basically, taxpayer funded healthcare, except instead of one managed care organization (the US federal government) you have multiple (United Health, Anthem, Kaiser, CVS, Humana, etc).

Why continue to allow the existence of these various parasitic middlemen health insurance companies with their redundant bureaucracies and the N x N billing problems, networks, etc. they introduce?

Because there are insufficient votes in Congress to change it. Even the current implementation of various managed care organizations and mandatory coverage with limits on premiums and out of pocket maximums BARELY passed.

And it was gutted pretty quickly when the most important part of it, mandatory purchasing of insurance (I.e. a tax), was repealed in 2017.

Which is crazy from the simple standpoint. All businesses other than health care coverage providers would benefit from never needing to worry about this HR burden again.

Probably those small companies lobby / donate to both parties to prevent a single payer system where normal workers and normal employees don't have to care.

They're not small companies, the managed care organizations (MCOs) are some of the biggest companies in the US.

But I do not think their lobbying is what prevents single payer. For one, single payer (taxpayer funded healthcare) still uses managed care organizations in the US. The only difference is that instead of paying insurance premiums to MCOs, you pay taxes to the government. The government then goes out and hires the MCOs to ration healthcare and implement various formularies and double check doctors' orders to limit spending and prevent waste. This currently happens with Medicare (over 65 years of age), Medicaid (low income/wealth), and Tricare (for military).

So the MCOs are involved in the healthcare delivery no matter what. The only difference is for non military, non poor people pay MCOs insurance premiums instead of taxes to the government, with which the government then hires MCOs to do all the administrative work of dealing with patients, doctors, finding fraud, approving/denying medicines, negotiating pricing, etc. Although, the government sets pricing in big ways too, via reimbursements for Medicare/Medicaid.

In any case, the elephant in the room is and always has been how much do people with money want to pay for people without money. The more obfuscation there is, the less healthcare is delivered, and the less it costs people who would be net payers into the system.

Sidenote: I think governments (politicians) like the system of using MCOs because they take the heat for any rationing or mistakes in the implementation. It's not the government denying you, it's UHC denying payment, even though the government gave the formulary to UHC to implement.

That's one of the reasons a lot of businesses in tech are founded while still in school: You get to keep your (low premium) coverage.

Isn't a lot of Europe like this? Do they have more entrepreneurial endeavors than the US?

Yes, in some places. In the US the entrepreneurship rate measuring the % of the population involved in that kind of activity hovers around 14%-ish. There are European countries like Estonia and others in the north and baltic regions that beat that rate while still providing high quality universal healthcare. As a rule, though, it seems like western European countries are significantly less entrepreneurial.

I think the entrepreneurial rate has a lot more to do with cultural attitudes around risk and individual success. Some countries like Italy, for example, have rates in the very low single digits. I'm not sure you can overall make a case for universal healthcare increasing entrepreneurial enterprise. Whether it might increase it specifically in the US might be a different question, though.

The right thing for the company to do would be to hire people as employees, but it appears that worker protections are too strong for them to want to financially.

Universal healthcare/dental/paid leave would allow for companies who’s employees currently are the only receivers of these “benefits” to not require companies to hold onto people so long.

Worker protections are supposed to be so that catastrophic job loss is less catastrophic and companies can’t just arbitrarily decide they need 20000 people one month and 0 the next. But we should definitely look into a better deal for the workers and give companies less power over their livelihood.

Some people, like the grandparent or me, don't want to be employees.

The difference between a contractor and an employee isn’t arbitrarily. Basically, if you’re using company equipment, following the companies schedule, and don’t have a clear task with a clear finishing condition then you’re an employee.

Finding someone to fill in for a secretary on maternity leave is fine, but open ended contacts on their equipment and schedule without some specific task is just opening them up to lose another lawsuit.

By that metric almost every contractor I've ever worked with should be an employee. Which I sort of agree with. But you can come up with "well defined project's" when its really "staff-aug".

And it's fine to be a contractor—as long as that's genuinely and meaningfully what you are.

If you're contracting out your services to only one company, and they have primary say over when and how you work[1], then that's not a genuine "contractor" relationship; you're an employee that they're taking advantage of by paying less and not providing benefits to.

If you really do want to be a contractor, who sells their services to many companies, sets their own hours, and has primary control over their tasks and such, then by all means do so. But please don't try to make things worse for the vast majority who do not want these things by advocating for stripping away protections from people who are being abusively and illegally misclassified as contractors.

[1] I don't recall offhand all the various specific aspects of a job that define whether you're logically a contractor or an employee, but I do remember that it's basically "if your livelihood depends entirely on one company paying you, and/or they have near-total control over how you do your work, you're an employee, whatever the paperwork says".

RE: [1] this is somewhat dated but a “contractor” friend used this “twenty factor” list to determine her “employer” was acting questionably maybe ten years ago: https://www.lakeshoreacct.com/blog/what-irs-20-factor-test

The site says the IRS no longer uses it but it’s still generally a good rule of thumb. And yes I recognize the irony that both her and her employer used the terms contractor and employer when describing their relationship.

The IRS has very clear guidelines on the difference between contractor and employee:

https://www.irs.gov/businesses/small-businesses-self-employe...

I also wouldn't want to be an employee. I work best in short monthly bursts with legitimate breaks in between. I'm working on setting it up so I can do that as an experienced consultant/freelancer.

The job market is pretty different though for full time employees - one part of which is the insane contractor usage at big companies with money. Microsoft is still like 50% contractors, and in this area if you have "contractor for a bigco" attached to your resume I'd estimate you'll be talked to by far fewer recruiters, and then offered less lucrative work. Also as others have stated you'll have up to 60% of what the company pays for your work taken by the contracting agency especially if they do "management" for their workforce.

Then benefits are a real thing. I have some healthcare needs which require me to have consistent insurance that isn't going to force me to other providers just because I switch. Retirement investing without a 401k is basically all cash since the roth and regular IRA limit is so low. I'm still figuring out how that will work, whether I should incorporate as a consultant so I can provide a 401k to myself, or just not bother with it and just invest.

You don't need to incorporate - you can open a sole 401k plan at Vanguard as an LLC.

Employee-status may come with certain benefits, but it also comes with many drawbacks and burdens for the employee.

For me, and probably many on this board, the biggest risk is "works-for-hire". Under US law, contractors have strong legal protections of their own intellectual protection. Whereas it's much easier for a W-2 employer to claim IP made in personal time.

I don't really care about healthcare of unemployment insurance. I'm well compensated enough that I can buy my own high-deductible insurance and have more than enough assets to feed myself between jobs. Forcing freelancers into W-2 status is just another example of the government screwing people over "for their own good".

> Forcing freelancers into W-2 status is just another example of the government screwing people over "for their own good".

It's the government screwing _some_ people over for the good of everyone else, where it's presumed that "good of everyone else" is worth more to society than what is lost by those that get screwed over by it.

At least, that's generally the intent.

I’m very glad we’re only screwing over “some” people, good to have that cleared up, thank you for that...it’s still an abominable practice to put any amount of laborers through.

Government policy is inherently concerned with those kinds of moral tradeoffs. Vaccines and lockdowns naturally pose such questions.

Are you of the belief that there are a set of policies/laws that result in everyone being happy and nobody being screwed over? Such a thing is not realistic. Every system of laws results in some people suffering for the benefit of others. The better law system result in less suffering for more benefit.

Considering that the people it was supposed to help are being fired every 2 years for 6 months I'd say the governments plan to help some people hasn't and caught people like the GP in the crossfire. Quelle surprise.

Ahh the old "Greater Good", the most evil phrase in the English Language

Anyone attempting to do anything for "the greater good" should be viewed with suspicion and disrespect as most at best what they are attempting to do no matter the intent will fail and harm more people than it will help

At worst is it just a shield to cover their immoral actions, or thirst for power

Every person that values freedom, individuality, and prosperity should reject any policy or law that is based on a "greater good" narrative

> Every person that values freedom, individuality, and prosperity should reject any policy or law that is based on a "greater good" narrative

Curious what you think about COVID lockdowns then

Should be very clear, I oppose government mandated lock downs.

What do you think about defence spending?

That is more complicated, but I take a traditionally libertarian view, opposing world policing actual defense is acceptable, actual defense being something akin to a slightly more powerful coast guard.

But going item by item on the list of government actions would be rather pointless, politically I fall somewhere between Anarcho-Capitalism and Geo-Libertarianism

Seems selfish. Lockdowns reduce deaths.

Edit: I don’t mean to call anyone names, genuinely interested in understanding if you’re concerned about being perceived as selfish and if so how you reconcile the tension?

>>if you’re concerned about being perceived as selfish

I am not, All persons act in their own personal or familial self interest, to deny that is to deny reality.

>>and if so how you reconcile the tension?

I dont plan to

>> Lockdowns reduce deaths.

There is very little actual evidence of this, even further there is little evidence that draconian government measures have done more than voluntary action of informed persons.

It is far too large of topic to discuss here but no one can honestly say "draconian government lock-downs were the best way to deal with the pandemic" because that is simply false.

Every person that values freedom, individuality, and prosperity should reject any policy or law that is based on a "greater good" narrative

So pretty much all laws and policies? Anarchy doesn't seem that sustainable.

I don’t understand why all the staunch libertarians just don’t move to a favela or some other similar place where they can enjoy absolute freedoms

Why don't people that want all these new things move to where they already exist?

In Response to this common statement we have 2 video responses

You Can Always Leave ( https://www.youtube.com/watch?v=fasTSY-dB-s )

Why Libertarianism Is So Dangerous ( https://www.youtube.com/watch?v=NbNFJK1ZpVg )

This was painful to watch.

I am sorry that logic and reason is painful to you

"logic and reason" sounds very cultish, like another way of writing The Truth.

Its more having a fake second class worker which benefits massively the employer and not real self employed people.

> Whereas it's much easier for a W-2 employer to claim IP made in personal time.

I've heard this mentioned a lot but how often does it happen and how much of a risk is it? Employees developing IP in personal time doesn't seem like it would be that common.

"This project happens to be owned by Google" is common for a reason.

I don't understand your response.

As a Google employee, Google owns everything you make even in your free time unless you go through some kind of process. Never worked there so don't know the details but have had it confirmed from other Google engineers.

Some other companies got this idea as well, but it's usually very easy to get that removed from an offer.

Or, your state could protect W-2 employees’ IP developed on personal time and equipment, as California does. You are barking up the wrong tree.

> Employee-status may come with certain benefits, but it also comes with many drawbacks and burdens for the employee.

Not to the employees in question. Clearly the frame and interview content of the linked article is that these employees WANT to be permanent employees. But they're not allowed to be because their employer wants the flexibility to terminate them at any time. The fact that the two year contract exists is just a side effect.

Yes, there are real people who want to do contract work. They exist, though it's relatively rare and clustered in careers (software is one) where short term work makes sense. But that's not who we're talking about here. These are datacenter maintenance folks, they want steady work.

And off topic, but:

> I don't really care about healthcare of unemployment insurance.

This is something only ever said by young people who have never been sick (or had a family member suffer from) with a career-threatening condition. Yes, in your 20's it sounds like self-insurance is totally doable. Wait until you have four dependents or until you need to arrange for a parents' surprise retirement.

I'll second that. I know many people stuck in the Microsoft forever-contractor hell (QA, Project Management, etc) and all of them want to be employees. They've worked there longer than most current employees in their area. They get 40-50% of what Microsoft pays for them taken by their consulting agency who has a contract with MS legal, so the only way to get hired for their positions is through that company.

Its a huge financial burden for them to have to take these 6 months off. The worst part is since they're all "contract ended" so regularly, Microsoft can just say they're not reopening for many req's and many people who were waiting their 6 months to be up so they could go back are suddenly having to look for a totally different job.

There is no single way of doing contract work. And the kind of thing Google does provide very little benefit to the contractor vs an employee.

I don't know how it is in the US but we have the same issues in France.

The law is called "délit de marchandage" and what it means, essentially, is that a contractor is treated like an employee but without the benefits of an employee.

The idea of the law is that contract work is fine, but the contractor has to stay independent. For example, if I want to have an Indian do the work for me, that's my right as a contractor, my only obligation is to deliver what we agreed upon in the contract. Obviously, it is not always practical, I may want to hire a consultant for a specific task because I don't have the expertise and it is not worth hiring someone for just that one task. That's where the 2 years rule comes from. If I have to hire a consultant, full time, for 2 years, then it is not just a mission anymore and I need to hire an employee.

Part of the problem in France is that it seems firing underperforming employees is almost impossible (multi-year process)

Yes, it can be very difficult.

But for it to be a multi-year process, it has to be an exceptional situation. Often involving court battles, unions, etc... In practice, most employees don't want to stay in a company where they are unwanted, they may try to negotiate a bonus but rarely fight to the bitter end. But sometimes, it happens, and it is one of the things small employers fear the most.

Getting fired can actually be a good deal for the employee because he will get unemployment benefits after that, whereas if you quit, you won't.

But generally, you are right by saying that in France having an employee is a big commitment for a company, plus, large companies often have unions.

Sounds like that legislation doesn't work at all for startups.

Startups have some benefits to compensate. Less legal obligations, less taxes, and sometimes subsidies.

There's a very clear explanation in the article about the reason for this from an employment attorney. It's necessary so that Google can falsely classify these workers as non-employees.

Under existing IRS guidelines, a company can't arbitrarily determine which workers are full employees and which are contractors. The business has to be able to prove when a worker meets certain key legal definitions about contract work, and, if they fail, they would be required to treat the contractor as if they were an employee, according to Figari.

"One of those guidelines is whether there is a written contract or employment benefits. The other aspect is, is the relationship a continuing one, and is it a key aspect of the business," Figari said. Companies will try to work around this by saying: "If it's cut off at a specific timeline, we were able to get by without them for six months. They are not a key aspect of our business, and [the role] is not a continuing one," she explained.

It is federal law that makes them do this, but it's also because they are in fact using contractors for full time work, they're just doing the bare minimum to separate the two.

They do it to keep headcount down, this is just abuse. Feds have their rules because of past abuse. This should be added.

but why are they no allow to do the same job as a Google employee? Isn't starting as a contractor and being brought on as an fte common practice?

They are not allowed to do the same job as a Google employee because Google does not want them to ever become an employee - even though they do need many full time people for that job.

Because if they're doing the job an FTE does, they should be full-time from the start. Otherwise, a company could be doing software development or food delivery or whatever and have no employees at all, merely having them all be "independent" "contractors" with very few legal protections.

That's the dream

You just invented Uber. Congratulations, you're rich!

They could hire them as a FTE, but that would cost more. This six month “break” is little more than a cost optimization exercise.

> but why are they no allow to do the same job as a Google employee?

That is how it is if you are a contractor working for any tech company.

The actual shitty part about being a "contractor" is you are almost always a W2 for the contracting firm. Which means you get none of the benefits of actually being a real contractor. As a 1099 you can:

* Deduct (and potentially charge for) a ton of shit like travel expenses, hardware, software, internet, phones, home office, etc

* Set up a SEP IRA which lets you contribute 25% of your salary up to $58,000. This is far more than what you can contribute to an employer sponsored 401k (though as a W2 your employer can top your 401k to the same limit)

* Bill as high of a rate as you can get away with

* Easily work multiple gigs at once

* Use your own tools.

* It's your own business, literally. So act like it!

The drawbacks to a 1099 are:

* You are your own collection agency. Some clients are very slow to pay you.

* You have to pay your own social security and stuff

* You pay full freight for healthcare

* You are not entitled to unemployment

* Taxes get a little more complex

* You are a "flake" in the eyes of a bank... so getting loans for houses and stuff is a little harder.

As a W2 working through a bodyshop you get:

* Paid weekly no matter how slow their client is paying

* They provide you equipment... no matter how shitty it is

* Maybe some kind of shitty healthcare offering that disqualifies you from buying your own plan and deducting it on your taxes

* Maybe some kind of shitty retirement plan that disqualifies you from contributing pre-tax money to your own IRA

* You can collect unemployment. Helpful for that 6 month break.

* You get paid at a substantially lower rate than whatever they are billing the client.

* You are a cog in a machine.

It depends a lot on the role. There are some roles where Contractor to FTE is fairly common and other roles where there is no equivalent FTE role and there is basically no chance of making the transition. (You would be basically applying fresh)

In my time at MSFT there was at least one staffing firm that was founded by a couple contractors who decided to just fuck it and make their own LLC so they didn't have to "pay the pimp" as some put it. If you went through them, you could do so as a 1099.

Given their "fuck it" roots, I'm not actually sure how much of a shield they provided between you and Microsoft's Accounts Payable. I bet they paid you every week like most of these staffing firms no matter how fast or slow Microsoft felt like paying its invoices. I'm also pretty sure they provided you with equipment (though how that works if you are also a 1099... I'm not sure).

What a lot of people who haven't done true 1099 work don't realize is... people and companies can be incredibly slow paying you. And as a 1099 you are your own collection agency so it's upon you to hassle them into paying you.

What I'm saying is... if there is a will there is a way. I bet there is more than a few Microsoft contractors who act like their own agency. It's probably a lot of paperwork, and I have no clue if it is worth it.

Oh man, the industry expectation of delayed payment was my largest headache as an independent contractor.

When I was first starting out, and still struggling to get a good stable of clients, delayed payment was often something I let slide in negotiations. Better to secure a 100k contract w/ payment 3-6(!) months out than risk losing out to another shop.

Even though I was bringing in a lot of income, cash flow was a constant struggle. It took a long time to build up enough billable work to smooth out income curve over time.

The worst of it was when I was just transitioning from a single man shop to bringing on additional help. Conversion from independent 1099 to having your own subs, or worse, trying to carry people on overhead is hard. As the owner, you've bought into the idea of lean times, and variable income, but staff expect to be paid every week. Gogo credit cards as short term emergency bridge loans.

Ahh, the fun of being a small business owner.

The trick for billing big companies (those with a separate accounts payable division) is to incentivize early payment (say with a 5% discount). Most account payable divisions will always try and pay the lowest amount, so they will pay early to receive the discount. Of course you bump up your rate in initial contract negotiations to make up for the discount.

I remember a contractor sued a startup for which I worked for treating him as a permanent employee yet didn't give her the same benefits, for the startup gave her the same laptop and the same office environment. She won the suit. Consequently, contractors from then on got crappy equipments and office environment from then on.

I worked at Ford as a contractor back in the 80's. They regularly hired contractors, usually from India on a green card, through body shops. The body shop could be making $30/hr while the contractor was getting a pittance in exchange for the green card. And because the body shop was sponsoring their green card, the "employee" couldn't switch to another company. Pretty horrible.

Instead of going through a body shop, which I refused to do, Ford just required that I was incorporated. This completely lets them off the hook on the contractor vs employee question. Did the same thing with IBM.

Forming an LLC is something that at least here in Indiana can be done in a few days by filling out a form online with the state and getting a tax id with the IRS. This allows you (actually, your LLC) to be directly hired at any company without them taking any risk of you being classified as an employee.

Indeed. Sometimes "wins" are really losses. This was a terrible outcome for temps in the long run.

https://duckduckgo.com/?q=microsoft+contractors+lawsuit+sett...

Very similar to the introduction of IR35 legislation in the UK.

And recent clamping down no?

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