Friday, August 31, 2007
The Independent Contractor Maid Service Company
One of the tricks of our trade is to classify your employees as independent contractors. The reason for this tactic is all about the numbers. At least on the surface.
Let's say that you're an independent contractor for a maid service. That means that the maid service agrees to pay you a set amount of money for work performed. In other words, you'll get paid as if you were your own business. The amount of time or resources dedicated to your work doesn't really matter. You can work one hour or you can work ten hours. In either case, you're getting paid the same amount of money.
Now let's say that you're an employee for a maid service. That means that the maid service agrees to pay you an hourly wage for work performed. Pretty straightforward stuff. You get paid based on the amount of time dedicated to your job.
Ok, trivia question time. Why would a maid service company prefer the independent contractor strategy?
A maid service would prefer the independent contractor strategy because it's much easier to calculate profit margins. For example, the maid service knows that they will be paying someone $50 for a job that earns the company $100. Thereby making the profit margin 50%. The employee model isn't quite as simple.
An employee may get stuck in traffic on the way back to the office. An employee may need to stay a few minutes longer in the home because the customer has a special request. Anything could happen to lengthen the employee's time sheet. This all costs money to the maid service company. Which means that this shrinks profit margins as well.
So what's the big deal? The big deal is that the independent contractor strategy is sometimes a big scam. The company may be employing this method because it can pay its "contractors" less than a fair wage. In some cases, the wage may even be less than minimum wage. This tactic is also very popular because it allows the maid service company to employ illegal aliens. The liability isn't with the company. It's with the independent contractor. Which leads me to yet another example. If there is no liability, what happens when something goes missing? You guessed it. The maid service isn't responsible. The independent contractor is responsible.
Now let me say that not all companies that employ the independent contractor strategy are scam artists. But the reality is that this strategy is easy to manipulate. And it's happening somewhere in your town today. Here's an example of a company getting caught in southern California recently.
Be careful out there. The maid service industry is ripe with bad apples. Just because they call themselves a business doesn't mean that they care about you as a customer.