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How Do I Switch My Business from IC to W-2

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  • How Do I Switch My Business from IC to W-2

    And NOT lose employees. Well this is the top call we are getting, mostly from Californians. Pressure is rising it seems. Fortunately we have our manual which helps a lot. Ironically it is going to cost the employer a bit more, and usually a single price raise can cover most of it. But how do you hold the staff meeting and conduct it on this topic. Illustrations help. Like the old "flash cards." And we give them the math and blank worksheets. There is no way for us to prevent the cost of worker's comp and CA in particular has some additional deductions, but we can make it easier. Judging by the calls coming in somewhere something must be putting on pressure.

    I am happy for it. That's controversial for some. You know that some people didn't like us too much when we brought up the inequities of assigning IC status to groomers about 8 years ago forward here, and printed articles in our magazine. Writing was on the wall that IC groomers would come to an end in the USA except for truly legal conformity. But shouldn't the "playing field" for all grooming employers be the same?
    Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

  • #2
    If you do a search for #Ab5 on twitter, you will see a lot of anxiety about this recently passed California legislation that is resulting in a hot focus on IC and employee status. Pro-union legislators very involved.
    New Jersey is next.
    Lorena Gonzalez's twitter feed is on fire. She was a big force in getting AB5 passed. Codifies the IC/Employee test.

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    • #3
      Lorena Gonzalez do you have a link to her twitter thanks emma

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      • #4
        But as I understand it they can only codify at a state level not federal, right?

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        • #5
          Originally posted by yankeedoodlepoodle View Post
          But as I understand it they can only codify at a state level not federal, right?
          That is correct. We have reported on this board and in past issues of PetGroomer.com that some states have "codified" specifically or generally that all or most pet groomers are not eligible for IC status. Every state has the right to qualify ICs separate of the IRS code. You can be legally classified as IC in federal level but not at a state level, and vice versa.

          We were the first and last to report within our industry the key issue that the IRS had used against some employers. We talked about it here and our magazine. We spoke with a groomer who thought she had done everything to legally at the IRS level to make her ICs legally classified. IRS agreed except 1 "rule" rarely printed that blew the employer's case. This was reported in our magazine some years ago. It certainly was not clear in the code at the time. The groomer was asked how pets she was grooming daily. I don't have the number in front of me it was about 8 or so. There were many other pets in the business each day. The IRS poised the question as I was told by the groomer as to what other pets in the business were her clients. The groomer employer said all the pets were her clients. BOOM. ICs should ONLY, 100%, be grooming their (legally theirs) client's dogs and if not, they are W-2 employees. Any pets the owner cannot groom that day are therefore done by EMPLOYEES of the business owner.

          Here is a common misconception. Be certain any newbies to this board and topic, when a customer of a grooming business where you work asks for you to groom their pet, that does NOT make that customer "yours" by definition of the law. THAT IS A PREFERENCE. The business owner who has legal financial responsibility for the services offered by the business is the legal owner, so asking for you as an employee to groom a pet still leaves you classified as a W-2 employee.

          I have seen owners make their cases that their ICs have their own phones, insurance, make their own schedule etc etc. But they are still grooming pets that are not their clients legally, and that the owner of the business for whatever reason is not grooming the pets given to others. If the owner of the clientele doesn't groom the dogs but assigns them to other groomers, those groomers are W-2 employees.
          Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

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          • #6
            It's about time. My competitors use IC. Not fair to us legal using W2.

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            • #7
              https://www.dlawgroup.com/what-is-california-ab5-law

              A pretty clear description of California's Assembly Bill 5 (Ab5), the law that takes effect in January. Skip the parts about Uber and Lyft.
              But will it be enforced? My guess is enforcement will be spotty because the real focus is ride-share and very large companies. I bet most salons will go on as usual, but that is only a guess.

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              • #8
                Bring it on. I am not hurt financially by the IC houses around here, I worry more for the groomers. Actually I think their groomers make too much less. But it is unfair they can operate that way without being legal.

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                • #9
                  The problem is they want to cut the pay most of the time. I understand the issue the employer has to go back to paying more taxes and contributions. But many employers survived and still do as w2. Why don't they just raise their prices a little? Or was that their plan, make them 1099 and let's cut prices below the W2 shops?????????????? Is that any way to compete?????????? Maybe.

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                  • #10
                    Originally posted by Emma123 View Post
                    https://www.dlawgroup.com/what-is-california-ab5-law

                    A pretty clear description of California's Assembly Bill 5 (Ab5), the law that takes effect in January. Skip the parts about Uber and Lyft.
                    But will it be enforced? My guess is enforcement will be spotty because the real focus is ride-share and very large companies. I bet most salons will go on as usual, but that is only a guess.
                    Good link Emma thanks.
                    Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

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                    • #11
                      We had 2 switch to 50% commission W2 and they lost 2 groomers. I know they came here and I said what's the difference? Weird, we are not 1099 and never were.

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                      • #12
                        We are W-2 and enjoy the peace of mind.

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