American Journal Experts and misclassification of employees as independent contractors

Wed, 27 Feb 2013 03:50:52 GMT

When I was a grad student at Portland State, during 2008-2010, I took a second job in addition to my research assistantship, doing scientific and technical editing for a company called American Journal Experts (AJE). AJE hires grad students to copy-edit academic articles written by authors whose first language wasn't English. The rates they pay are very low -- because the rates are based on the article length rather than on time spent, and because many papers were in seriously poor shape, I usually found it necessary to spend so much time on a single paper that my rate came out to minimum wage or below. But, it was a job I could do from home at any hour of the day, and because my research assistantship didn't come with health insurance, I had very little choice but to take a second job so I could pay the student health insurance premiums (which tripled in cost during the four years I was at Portland State).

Anyway, AJE hired grad students as independent contractors, and for all I know, they still do. However, in the US, "independent contractor" is a term with a very specific meaning. A company can't just hire anybody they want to as a contractor -- they have to follow certain rules for how they treat that individual. As AJE began to exert more and more control over how I did my editing work, I began to think that I was really an employee, so I filed an SS-8 form with the IRS to request reclassification as an employee. That was in April 2010.

I never got a reply from the IRS beyond the initial one saying my letter had been received... until this past weekend, when I happened to be at my former housemate's house for a party and she handed me a letter that had been sent to me there. The letter was dated January 2013 and in it, the IRS stated that I had indeed been an employee of American Journal Experts, as per the legal definition of what "employee" and "independent contractor" mean in the tax code. The letter also stated that normally, the IRS tries to get both sides of the case in an SS-8 reclassification -- the employee and the employer -- but that AJE never replied to their request. I guess this may have been why it took more than two and a half years for the IRS to process my SS-8. (I was surprised by the length of time, since in 2006 when I requested (and was granted) reclassification as an employee after I'd worked as a contractor for Laszlo Systems, I received a response from the IRS very promptly.)

What this means for me concretely is that although I paid self-employment tax for the years when I worked for AJE, I didn't really have to, because AJE should have been paying half of my FICA taxes. Unfortunately for me, the statute of limitations on tax refunds is three years (from when I filed my return), so I can only file an amended return for 2010; 2009 and 2008 are water under the bridge.

This means something for a lot of other people as well: AJE has hundreds of grad student contractors, or rather, employees, and because their jobs are no different from my former job, they can all file SS-8 forms as well. I don't know what will happen if AJE continues to hire new employees while misclassifying them as contractors.

To help anyone who might want to do this, here's a PDF link to my filled-out SS-8 form that I submitted in 2010. The form mentions an auxiliary letter, and here's another PDF containing both that letter, and the reply I received from the IRS 2 1/2 years later. The IRS really gets a bad rap, but both times I've gone through the SS-8 process, I've been impressed by the clarity and thoroughness of the letters I've received in response. My auxiliary letter mentions some supporting documents that I haven't included in the PDFs, but if you want to see the whole package for whatever reason, let me know.

At this point, you might be saying, "what's the big deal, Tim? Don't companies abuse independent contractor status in this way all the time?" Yeah, they do, but I think it's a big deal every time that they do, because every time that they do, it's one more reminder to all of us that corporations get all of the privileges of being people and none of the responsibilities. If people (specifically poor and working-class people and people of color) get punished when they break the law, corporations should have to follow the law too, whether or not they like the laws, and whether or not the laws are convenient to follow.

Feel free to pass around this link to people -- it's public -- either because they've worked for AJE, or because they've done similar work, or just because they want an example of a filled-out SS-8.

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American Journal Experts and misclassification of employees as independent contractors