Comment by magicloop | Hacker News Reader

Comment by magicloop | Hacker News Reader

The UK/IE market is skewed due to the legislation that essentially ignores intermediaries and considers whether a freelancer is under management supervision and control, in effect an employee (using an unfavourable tax definition of such working practices). The poison pill is the end hirer is passed liability for ensuring the worker is classed properly for tax. The game dynamics that result is that any large corporation cannot hire freelancers directly anymore for 'knowledge worker' type jobs as the taxman would just do a bulk audit and penalise in one go (rather than in the old days of individually pursuing contractors separately which is not scaleable).

So freelancing only is a reality if you just serve small companies; e.g. do word press and web site updates for a bunch of local businesses, and other ad hoc tech support type work. Big money contracts with large corporations is all done via service provider companies paying contractors through Umbrella or on their payroll.

Interesting, wonder how this situation applies to the US? Some states have similar laws. I know of one case where a contractor that should be an employee is working ultimately for Uncle Sam in such a state.

I imagine it's less of a pressing issue in the US. In the UK, people who are sole traders/true freelancers don't have to pay the same taxes that employers have to pay on salaries (a class of 'national insurance', essentially a form of payroll tax). In this way, sole traders/freelancers are sometimes painted by the media as "avoiding tax" and the tax authorities much prefer to get people in as employees where possible as they raise more funds. In the US, I believe there is a specific "self employment tax" to cover this problem, so I imagine the IRS doesn't care as much.

Note that the tax laws in Ireland are quite different from the UK. There's not really much tax benefit from being a contractor versus an employee.

Have you heard of California's AB5? Essentially destroyed the freelancer/contractor market in CA.

> Have you heard of California’s AB5? Essentially destroyed the freelancer/contractor market in CA.

AB5 (2019) added a bunch of exceptions allowing contractor designations to rules restricting designation of employees as “contractors” resulting from the California Supreme Court’s application of pre-existing law; either the court decision “destroyed the freelance/contractor market” or nothing did, since what AB5 did was loosen the rules.

Software contractors were not included in the exceptions to my knowledge.

To address your sibling comment, you will have trouble if the contractors work is directed, which it often is.

To address the grand parent, yes I'm aware of it and why I made the post. The work continues in spite of the law. Another wrinkle is Uncle Sam being the plaintiff. Should ask on Lawyer News I guess.

(Am limited to a few comments per hour, so need to conserve them.)

> Software contractors were not included in the exceptions to my knowledge.

Software contractors don’t have their own special exception, but would often fall within the Business Service Provider exception; some software contractoes (web designers hired through referral agencies, specifically) would fall into the exceptions for certain workers hired through referral agencies.

And, of course, because of the Supremacy Clause, direct relations with the federal government are not governed by state labor laws, in any case.

Not true, the Dynamex ruling was only applicable to wage orders by the Industrial Welfare Commission, and AB5 expanded the applicability to other aspects of labor law.

No it didn't. The contractor market is very much alive and well in CA, and AB5 was an obvious clarification targeting contractor-in-name-only type gigs. Of course the main target of the bill, Uber/Lyft drivers ended up getting shafted after the ignorant public passed prop 22, but a software contractor/freelancer would have had no issues passing the contractor vs. employee test specified in AB5.

That's not really true; AB 2257, passed later, fixed some important issues with section 2776.

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