What Is The Correct Pay Rate? If you’re working a temp assignment, you are familiar with pay rates. As many of you know, the challenge comes when you work a temp assignment and the office writes you a check for a days work. Nice!. You got paid and the office receives the requested service. Were you compensated correctly? Let’s’ take a look below.
1099 or W-2?
A 1099 is a tax form documenting different types of payments made by an individual or a business that typically isn’t your employer. You will fill out this form with the appropriate details and send copies to the IRS, reporting payments made during the tax year. If you are a W-2 employee, your employer will process your payroll and make employer contributions and report earnings to the IRS etc. You will receive your W-2 at the beginning of the following year.
Employer of Record
An employer of record (EOR) is an organization or company that serves as the employer for tax purposes while the employee performs work at a different office or company. The EOR takes on the responsibility of traditional employment tasks and liabilities. The AGA Group would be an example of your Employer of Record.
As a temp, you will want to make sure you are either having your payroll taxes, Medicare contributions, Social Security contributions, FUTA [Federal Unemployment Taxes], SUTA [State Unemployment Taxes], Workers Comp and other Insurance submitted on your behalf. These employer costs typically will run 25% of your pay. This is important for you to know: Let’s say you are being paid $40 an hour, you should ask the employer, if they are making the above contributions each pay period on your behalf? If they are not, the employer is assuming that you are a 1099 professional and that you are making those contributions. So, what Is the correct pay rate? In this example, your $40 an hour pay rate is really $30 an hour. You should have requested to be paid $50 hr to allow you to make your contributions to your SS, Medicare, and other taxes. To be quite honest with you, many offices are probably not thinking this way. But, I bet their Accountant is.
The best way to address this is to ask the office to W-2 you, and to make sure they are making the required contributions on your behalf [look at the paystub]. If you are being paid with a check at the end of the day, this is a great time to ask more questions.
This can be avoided by consulting a staffing agency and have them act as your EOR, and have the client pay the staffing agency and let the staffing agency pay you. The staffing agency is equipped to process your payroll as well as bill the office at a rate that will allow your Medicare, SS, FUTA, SUTA, Workers Comp and Insurance contributions to be paid. The employer is supposed to make these payments on your behalf. Two days becomes six months and morphs into years of no contributions on your behalf. Consequently, it has affected your retirement contributions etc.
What Is The Correct Pay Rate? Know Your Rights.
Looking to be fairly represented on future dental office assignments? Contact The AGA Group, a top dental staffing firm based in Kanas City, and start browsing our employment opportunities. As a workforce solutions company with a team of Payroll Professionals, Legal Team and HR Consultants, we can provide answers to your questions.