Question 1099 Contractor Vs Minimum Wage Rate - Virtual Assistant Forums

misssjean · #1 (**permalink**) 12-29-2008

Hello all:

Hope everyone had a wonderful Christmas holiday!! I had a quick question. I referred a client over to another fellow associate of mine since I was unable to handle the work. It was a data entry position that I just could not put into my other clients work schedules and such.

The fellow VA has her own rates/schedules/hours, etc. I got an email from the client stating that my fees were way over minimum wage and that I should lower future data entry projects at the FL minimum wage rate.

The thing is..I will not be receiving a 1099 from this particular client since my wages are not over the $600/year limit - but is it required by law to work at minimum wage or higher? Or does the law vary by state?

Apparently, the fellow associate is offering him $6/hour versus the FL minimum wage rate of $7.21. I'm sure there are many VAs out there that work well over the state/federal minimum wage, but for those that obtain work from referrals or from freelance websites such as Elance or Guru and submit a bid below the "minimum wage" - how does this work?

Rebecka Melson · #2 (**permalink**) 12-29-2008

To answer your question, only employees are required to be paid minimum wage. The minimum wage laws do not apply to contractors.

If I were you I would tell him to take a hike and that you're more than happy to let him pay someone else minimum wage or less, because you are worth much more. Frankly, I wouldn't even be speaking to someone who only wanted to pay those rates.

anisemama · #3 (**permalink**) 12-29-2008

I'd tell them that if he wants to pay minimum wage, he can hire someone locally that I'm sure would be more than happy to work for it.

And have to pay for her workspace. And employment taxes. And the bookkeeper to handle her pay. And the required unemployment insurance. At which point, he'll likely be paying more per hour than he pays you!

Hettwer_Virtual_Office · #4 (**permalink**) 12-29-2008

Sounds more like the client was fishing for a cheaper rate from you. Independent Contractors set their own rates and they are not bound by the minimum wage laws.

CyberAsst · #5 (**permalink**) 12-29-2008

Your client is misinformed. He doesn't understand that min. wage = employee and employee = employee benefits (match taxes, social security etc). This would cost much more than min. wage. Besides min. wage is just that a starting point.

Virtually Dee · #6 (**permalink**) 12-29-2008

This client doesn't know the difference between an employee and an independent contractor. The fellow VA really low-balled the job too! I think I'd part company with this client, and let the other VA keep the work.

All About Assistance · #7 (**permalink**) 12-29-2008

I think that is I had work that I couldn't do, then I would either sub it out to someone else - even if it ends up that I pay them exactly what I'm billing the client - so that I keep the consistency re: rates for future projects with the client.

However, this probably did flesh out the fact that this client is a real bleep, bleep and it's a good thing you found this out sooner than later.

Pam

misssjean · #8 (**permalink**) 12-30-2008

Hello Ladies!

Thank for the uplifting advice and information. I wanted to double-check that "gut" feeling that I had. This client has been so good to me and although I do not complete a data entry work for him - it's just a shame. I guess business relationships have some sort of bump in the road and come to an end. I'll keep you guys updated and see how things work out.

He sent me an email apologizing for his tone since I told him I definitely did not appreciate the way his email portrayed to me as it reads. So I felt better after that, but I will not be lowering my rates since I am worth more than the actual "minimum wage" Thanks gals!!

anisemama · #9 (**permalink**) 12-30-2008

I've had people question my rates before, and they really aren't high at all. Often people who have never had employees don't realize the costs associated with employees. That's why I'm considering adding a page to my site that points out the cost of an employee, so that they can see those VA rates aren't so bad after all.

Also, minimum wage is actually designed for starting out, unskilled labor wages. It's not for skilled work, or at least it shouldn't be.

If I were to go apply for a job using the skills that I use as a VA, I certainly would not ever accept minimum wage, which is $7.40 an hour in my state. Ten years ago, when I was working in an office setting, the starting wage for an administrative assistant was $12.50. I'd certainly expect to be paid more than that.

The cost of an employee can easily run double what their wages are, and those who have never paid an employee just don't quite get that.

lori763 · #10 (**permalink**) 12-30-2008

I agree that minimum wage is for entry level work and ridiculous to expect high quality and knowledgeable work for that wage.