Are You a ‘Permalancer’ at Your Place of Employment?

June 5, 2008

PermalancerIf you’re scratching your head at the term “permalancer” then perhaps at your place of employment, you receive paid vacations, paternity leave, medical benefits, a lush 401k and maybe even dental health. Now imagine this: Would you do the same job without the benefits? More than 10 million U.S. workers do according to the Government Accountability Office (GAO).

In its early stages, a permalancer perhaps started out as a freelancer who overstayed his or her welcome. A few weeks may have turned into a few months then years, at which point, the employer must file certain paperwork to classify the worker as an employee. Specifically, the IRS states the employer must withhold income taxes, withhold and pay Social Security taxes, Medicare taxes and pay an unemployment tax on the employee’s wages.

Many employers “freelance” out the work because it’s cheaper. However, many employees “permalance” out the work because it’s also cheaper, even if “employees” show up at the office everyday.

U.S. House Democratic lawmakers, Lynn Woolsey (CA) and Rob Andrews (NJ) are introducing legislation, the Employee Misclassification Prevention Act of 2008 (H.R. 6111), to crack down on employers who misclassify its workers as independent contractors. Not only is it costing the government billions of dollars in missing revenue, but also these lawmakers state that the employees are robbed of benefits. Permalancers are not entitled to unemployment benefits if they are laid off; worker’s compensation if they are injured, nor overtime-wage enforcements.


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