Last Saturday started off rough with the wrong address for a delivery. Then a Mom called crying that her daughter's name wasn't more prominent on her cake. It was a mad rush but finally the last cakes are out, around 5 PM we get a call from the ladybug cake owner that her lemon cake is Chocolate inside. OH NO! We searched for the chocolate cake order of the same size that must be lemon and found the new owner leaving a message. We were Ready to reimburse both cakes and coupon gift free cakes. Both decorators were confused and felt dumbfounded because they were sure they had put pillers in that chocolat cake and it was indeed chocolate. Mortified and day ruined we answered another call from the supposed to be lemon but chocolate cake person, who informed us that it was infact lemon cake. How the cake was mistaken is still and will always probably be a mystery. We had a nice laugh and told each other how good we really are at cakes.
Do any of you owners like me hire people as subcontractors to complete and work on cakes? I need to know how you pay them by the hour or by the cake? Do you preassign or let them pick? What if you as the owner help in the decor? What percentage of a cake sale is fair? All this stemming from a subcontractor threatening to go to unemployment if we let him go! Help[img][/img]
Sounds like you've got an employee. Subcontractors are typically paid by the job (not by the hour), they set their own hours, can pick and choose what job(s) to take and which to turn down, use their own tools and equipment, and are responsible to claim their own wages/pay their own taxes... the list goes on.
If he's truly an employee that's threatening to collect unemployment, that's what it's there for. You're probably paying in to unemployment at the highest rate anyway, so there would be no more penalty charged to your company anyway so what more are they going to do? If that's the case, there's really no reason to fight it or try to deny his benefits. You might want to call your unemployment office or Dept. of Labor Division if you are unsure about your current status rating or how subcontractors are to be considered in your business.
If you did not follow all of the rules for independent contractor and he turns you in, you are responsible for all of his back taxes and you cannot collect from him. You don't pay unemployment for independent contractors. But if he was wrongly classified, the state will allow it and send you the bill with penalties. The IRS is very hard on employers of employees classified as independent contractors. In the recession, these independents are not paying their taxes and the IRS is actively seeking misclassified laborers to get that money from the employers. I use independent contractors in my business, but I have a degree in accounting and I follow the rules to the letter of the law. Mine tell me when they are available, work at their own station with their own tools, get paid by the job, THEY MUST HAVE A WRITTEN CONTRACT BY LAW, have an IRS form signed before any work commences giving permission to give them the 1099, and no expenses (mileage, etc.) can be paid by you. And none of this can be done in hindsight. There is a list of requirements on irs.gov for independents. If he is, indeed an employee, and not an independent per the IRS, I would try to make him happy for now, fix the problems... especially the 1099 permission form for 2010 (this may be illegal, so check), and let him go later. Or let him go and pay the back taxes and unemployment. My husband did this two weeks ago when he fired someone who was caught stealing. I told him he had misclassified her so he self-reported and paid the bill. She was an independent contractor, but he paid her mileage and did not have a written contract. It was an honest mistake but he still had to pay.