Complaint Review: Neptune Society of Sherman Oaks.. - Sherman Oaks California

                         Employee or Independent Contractor?

In recent years, the Internal Revenue Service (IRS) has sought and imposed severe penalities on companies that treat employees as independent contractors, and which fail to withhold taxes.  To avoid the paperwork burden and expense of payroll taxes, some employers inappropriately designate workers "independent contractors.:  If the IRS determines that the worker is actually a "employee," the person responsible for the collection and payment of withholding taxes may be held personally liable for an amount equal to the taxes that should have been withheld.

The IRS considers 20 factors in determing a work's status.  Meeting just one of the conditions may qualify the worker as an employee.  If the company is unable to determine the appropriate designation from the IRS guidelines, the IRS will help.

Now I would like to post here an advertisement that the Sherman Oaks branch manager has posted on craigs list regarding soliciting new salespeople. 

"LEADS provided!!!!!  SPEAK TO CLIENTS THAT HAVE ASKED TO SEE YOU!!!!!  Professional in home closers........Daytime Work........Training provided......Work for a company that is #1 in world.......Advancement opportunity.........Spanish/Bilingual encouraged to apply"  This was posted 2010-04007 by [email protected]

The important part of this ad is the "Training provided".  While with Neptune Society and under the management of Dave Haptonstahl we were pretty much required to attend the training sessions that went on at the office.  If we did not attend the training sessions we were told our leads would decrease in number significantly.  These leads were given out based on what the manager felt was his best interest in handing leads out. No one invested money in these leads, so there was no investment on the part of a Independent Contractor.   Because I had worked dillegently in the past regarding this job, many of the reps could not figure out why I was always in jeopardy of loosing my job.  Once again, it is the people factor.   I consider myself a very well educated and informed person having an awareness of my surroundings at all times.  In these training sessions we were instructed how to make telephone calls to make the appointment, told percisely what to say, how to say it and did role playing in regards to this during our training sessions.  We were also instructed what to say when we were in the clients homes and overcome objectives that the clients would say.  We were provided with access to a specific program that we had to imput information into regarding our progress with each client.  The number of times we had tried to reach the client, what the client said once we reached them, whether or not we set an appointment and what the outcome and the reason the appointment if the appointment did not purchase from Neptune Society.  Doing these things were a definate part of Neptune Society to control their investment into the leads they developed and definately a way to control what, when and where their reps were doing business.   Also each month we were required to list two (2) businss to business contacts that we had made during the month.  These were requirements that were made or we would get less leads.  Also, we as contractors, were not required to do what they called floor time (answering inbound calls in the pre-need department).  However depending on what we said on the phone would determine how much floor time we actually got.  We were instructed on what to say and how to say it on inbound calls.  There were instances where the people answering the phones were instructed not to give the price even though the caller was asking for the price.  The manager was informed by the people in the office that the fomer manager had instructed them to give the price over the phone because this is what the funeral board rules and regulations were.  Dave Haptonstahl in essence said he did not care if that's what the funeral boards rules and regulations were or not, to get around not giving a specific price out to the inbound callers. 

In my opinion this has to do with all the 20 points of being an Independent Contractor or an employee.  My opion is that Neptune Society does not meet these 20 points of  criteria enough in order that  salespeople meet sufficient requirements to be Independent contractors.  This I believe and is my opion and my opinion only at this time that Neptune Society avoids the paperwork burden and expenses of payroll taxes, by inappropriately designate workers as "independent contractors." Thereby transferring the burden of paperwork and taxation responsiblities onto the employee inappropriately.  The reason that this is my opinion is the proof of responsibility really is on the employer, Neptune Society, to the IRS to prove that an Independent Contractor status really does exist.  Following guidelines laid out by the IRS, it appears to me that Neptune Society only meets a few of these points that they, Neptune Society feels and deems neccessary in order to accomplish avoidence of the burden of paperwork and withholding of taxes and not paying their fair share of Social Security taxes. I have inquired through the IRS for clarification on this and am disputing any tax liability until such a time the IRS makes determination if Neptune Society has inappropiately designated Employees as Independent Contractors.

When I started with Neptune Society at Sherman Oaks office for the second time in January, 2010 I informed Mr. Haptonstahl that I was now employed by an LLC.  Mr. Haptonstahl informed me that Neptune Society would not employee me under those circumstances, that I had to considered an individual in order to work for Neptune.  He went on to ask if this was a "deal buster".  I said no because I needed employment at the time. So this has consideralble influence on whether or not Neptune Society actually employees "Independent Contractors"  or that they are actually employees classified as "Independent Contractors".  At the time, the LLC I was working for employed other sales reps in other states with other companies.  I gave Neptune the Opportunity to employ as an Independent Contractor working under an LLC but they refused at the time, labling me as an individual and paying directly to my bank account rather then the LLC.  I believe Mr. Haptonstahl had mentioned the fact, wouldn't I too like the tax advantages of working for an LLC wherein he could write things off that were related to business.  Yes, Dave, the only difference was you were classified as an employee and you classified me as an independent contractor.  One day I hope to teach you the real difference between the two.

20 Points---

1. Profit or Loss.  Can the worker make a profit or suffer a loss as a result of the work, aside from the money earned from the project?  (This should involve real economic Risk-not just the risk of not getting paid.) 

2. Investment.  Does the worker have an investment in the equipment and facilities used to do the work?  (the greater the investment, the more likely independent contractor status.)

3.  Work for more then one Firm.  Does the person work for more then one company at a time? (This tends to indicate independent contractor status, but isn't conclusive since employees can aslo work for more then one employer.)

4.  Services offered to the general public.  Does the worker offer services to the general public?

5.  Instructions.  Do you have to right to gie the worker instructions about when, where and how to work?  (this shows control over the worker).

6. Training.  Do you train the worker to do the job in a particular way?  ( Independent contractors are already trained.)

7.  Integration.  Are the worker's services so important to your business that they have become a necessary part of the business?  (This may show that the worker is subject to your control.)

8.  Services rendered personally.  Must the worker provide the services personally, as opposed to delegating the tasks  to someone else?  (This indicats that you are interested in the methods employed, and not just the results.)

9.  Hiring assistants.  Doyou hire, supervise, and pay the worker's assistants?  Independent contractors hire and pay their own staff.)

10. Continuing relationship.  Is there an ongoing relationship between the worker and yourself?  (A relationship can be considered ongoing if services are performed frequently, but irregularly.)

11. Work hours.  Do  you set the worker's hours?  (independent contractors are masters of their own time.)

12.  Full-time work.  Must the worker spend all his or her time on your job?  (Independent contractors choose when and where they will work.)

13.  Work done on premises.  Must the individual wor on your premises, or do you the route or location where the work must be performed?  (answering no doesn't by itself mean independent contractor status.)

14.  Sequence.  Do you have the right to determine the order in which services are performed?  (This shows control over the worker)

15.  Reports.  Must the worker give you reports accounting for his or her actions? (this may show lack of independence)

16. Pay Schedules.  Doy you pay the worker by the hour, week or month?  (independent contractors are generally paid by the job or commission, although by indrustry practice, some are paid by the hour.)

17.  Expenses.  Do you pay the worker's business or travel cost?  (this tends to show control.)

18.  Tools and materials.  Do you provide the worker with equipment, tools, or materials?  (independent contractors generally supply the materials for the job and use their own tools and equipment.)

19.  Right to fire.  Can you fire the worker?  (An independent contractor can't be fired without subjecting you to the risko f breach of contract lawsuit.)

20. Workers right to quit.  Can the worker quit at any time, wiout incurring liability?  (An independent contractor has legal obligation to complete the contract.

While working with Neptune Society, I do believe that Neptune meets some of these points, the ones that they want to meet, especially the ones where it comes to money out of their pocket.  Like mailings, Neptune stopped letting Independent Contractors mail anything from their office.  But my belief is that the downturn in the economy was a result of this more then anything else. However on an overall basis there are just some of these requirements Neptune Society can not meet.  Point #7. Integration.   Are the worker's services to your business so important to your business become  part of your business that they have come a neccessary part of your business?  ( this may show how important it is to control.)    Neptune Society Pre-need program is definately what Neptune Thrives on.  The workers are such that they are a part of the business that Neptune has no choice but to control these workers.  Are these workers then classified as "Employees or Independent Contractors"?  No matter how far you stretch it you can't come up with Independent Contractors other then for the reason of Burdensome Paperwork and Tax Liabilities!

People are encouraged to come into the office to work at neptune Society.  As a matter of fact when they switched over to the new computer program, I even set up an additional workstation so people could do their lead printing and use of an additional computer over the one that was already in the office. Set up router cables so that laptops could be brought into the office to be used on premises.  It was not a requirement to come in on call night but you would, if not a top producer in the office, recieve less leads to work from.  Like I said, if I had to purchase these leads outright from Neptune Society for what they say it cost them to produce, I would have never taken on this job because the opportunity to loose money is much greater then the opportunity to make money.

Regarding an investment in property and equipment in order to do the job, I don't think working from home on a computer would be an investment.  We did not have to purchase the leads form the company so there was no investment in the leads.  However, in my opion, because we had a time requirement that we had to enter information into the computer in order to have management oversee what we were doing with these leads, definately shows control over how they control the leads.  If I were to purchase these leads from Neptune Society, for the same price that it cost them to produce these leads, there is no way that I would have become an independent contractor. Therefore with no risk put out for the lead there was no real risk of profit or loss except for the time I spent and the miles that I drove. 

It certainly wasn't encouraged that person worked for more then one employer.  Once again if an individual had to purchase a lead for the same price it cost Neptune Society to produce the lead there would be less risk on Neptune's part that they could have an outright loss of money other then the independent contractor not producing a profit for them by transforming that lead to a contract.  Working for Neptune Society, I'm not sure what basic services an independent contractor would have to offer to the general public.  Only Neptune is the license holder in this instance and the independent contractor is only a salesperson on their behalf.  So the independent contractor has no basis of services that they are offering to the public.

5. 6. and 7 in these points do really show that people working in this position are really employees and not independent contractors, of course this in only in my opinion because I am not the IRS to determine this.  I do believe that we were instructed on a weekly, bi-weekly and monthly basis on how to sell this product.  What to say, how to say it, how to approach the customer and were trained continually on the job.  Were we really independent contractors or were we mere employees classified as independent contractors.   The question is about Integration.  ARE THE WORKER'S SERVICES SO IMPORTANT TO YOUR BUSINESSTHAT THEY HAVE BECOME A NECESSARY PART OF THE BUSINESS?  ( This may show that the workr is subject to your control).  I believe that Neptune Society is so dependent on their Independent Contractors that they have no ability not to show control.  The idea of how much was invested in each lead by Neptune was always brought up.  Neptune has a substantial investment in their lead system and needs to have control over the people that handle these leads.  Once again, is this an employee status or Independent Contractor.  I could not understand any IRS agent walking into the operation and taking a good look at this and not coming up with that Neptune Society definately has a misclassification going on here.  Should taxes be withheld.  Should Neptune Stand good on these taxes.  Kind of like the Colorado thing where Neptune was underfunding Trust Accounts.  Cutting corners to provide the ownership of the company with more descressionary cash.  Is Neptune definately underfunding their tax liability.  I think they are.  Independent Contractor or Employee?  I think they know the answer to this and it isn't what they are doing because they are momentarily getting away with it.

10.  Continuing relationship.  Is there an ongoing relationship between the worker and yourself?  (a relationship can be considered ongoing if serices are performed frequently, but irregularly).  Almost all reps with Neptune Society have ongoing relationships with the company and are required to report in on a regular basis, especially when sales are made or even not made.  Neptune Society has installed more control over the reps then what they've ever had in the past by requiring them to use the lead management tool on the computer.

Now approaching the last subject, Can you fire a worker?  Neptune doesn't need to fire people, however when I worked for the Arizona Manager, he specifically told me I was fired and reassigned my leads to other people even after I had time, energy and several hours of travel time involved. 

And then there is the fact. does the worker have the right to quit.  Of course they have the right to quit, without incurring liability. There is no risk of loss by quiting other then not having an income of commission coming in. 

My question really is Does Neptune have a justifiable right to contract out work to Sub-contractors known as Independent Contractors or is this just a way to get around Government Taxation and the burden of employing individuals.  Do they meet the 20 points of a Independent Contractor?

here is another website that leans on whether a individual is an Employee.  The last 20 points leaned on whether an individual is an independent contractor.

1.  Instructions.  An emploee must comply with instructions about when, where and how to work.  Even if no instructions are given, the contraol factor is present if the employer has the right to control how the work results are achielved.

2. Training.  An employee may be trained to perform services in a particular manner.  Independent contractors ordinarily use their own methods and recieve no training from the pruchases of their services.

3. Intergration.  An employee's services are usually integrated into the buienss operations because the services are important to the success and continuation of the busienss.  Thsi shows that the employee is subjet to direction and control.

4.  Services rendered personally.  An employee renders services personally, tis shows the employers is interested in the methods as well as the results.

5.  Hiring assistants. An employee works for an employer who hires, supervises, and pays workrs.  An independent contractor can hire, supervise and pay assistants under a contract that requires him or her ot provide materials and labor and to be responsible for the result. 

6.  Continuing relationship.  An employee generally hasa continuing relationship with an employer.  A continuing relationship may exist even if work is preformed at recurring although iregular intervls.

7.  Set hours of work.  An employee ususally has set hours and work of estblished by an employer.  an independent contracor generaly can set his or her own work hours.

8.  Full-time required.  An employee may be required to work or be available full-time.  This indicates control by the employer.  An independent contractor can work when and for whom he or she chooses.

9.  Work done on premise.  An employee usually work on the primises of an employer, or works on a route or at a location designated by an employer.

10.  Order of sequence set.  An employee may b required to perfor services in the order or sequence set by an employer. This shows that the employee is subject to direction and control.

11.  Reports.  An employee may be required to submit reports to an employer. This shows that the empolyer maintains a degree of control.

12.  Payments.   An employee is generaly paid by the week or month.  An independent contractor is usually paid by the job or on straigh commission.

13. Expenses.  An employee's business and travel expenses are generally paid by an employer.  Thsi shows that the employee is subject to regulation and control.

14.  Tools and materials.  An employee is normally furnished significant tools, materials and other equipment by an employer.

15.  Investment.  An independent contractor has asignificant investment in the facilities he or she uses in performing services for someone else.

16.  Profit or loss  An independent contractor can make a profit or suffer a loss.

17.  Works for more then one person or firm.  An independent contractor is generally free to provide his or her services to two or more unrelated person or firms at the same time.

18. Offeres services to general public.  An independent Contractor makes his or her services available to the public.

19.  Right to fire  An employee can be fired by an employer.  An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of the contract. 

20.  Rigt to quit.  An emploee can quit his or her job at any time without incurring liability.  An independent contractor usually agres to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make food for failure to complete.

Now to wrap this complaint up and what I hope to accomplish from it.  First off, I don't want to damage the employees of Neptune Society.  I believe there are a lot of really good people working there.  What I hope for is that Neptune becomes a better company and operates on a level of integrety that the consumer in the Los Angeles area feels that they operate on.  However when you portray an image that is not in line with what people believe in  with your management people in a way of acting responsible and being a member of a community and a society in such a way that people expect a company to be then changes need to be made.  One of these changes are definately that Neptune Management company comply with IRS regulations by complying with the law.  Putting the burden of taxation and paperwork on the employee as the owner of the company lays in the Bahama's saying that he would be well qualified to run Strip and Porn businesses because he is an ethical business person and that each and every one of the ladies that would work for the club would be considered independent contractors is an arrogant statement and a statement that slaps our government in the face as he is above the law.  This management style falls the same with the Sherman Oaks office, that MR. Dave Haptonstahl can operate any way he wishes because he is above everyone else.  Here's to you Hap!! The man that replaced Larry at half the cost and that you put in half the time.  When I worked for Marsh McLennan in Anchorage, Ak, it was really cool that the Seattle office cloesed two hours earlier then we did because of the time zone change and we didn't have to hang around much past the hour of 2pm.  Does Your employer know that you come in around 9am and leave at 2:30 pm??   So you half the money Larry got and you spend half the time on the job.  Nice One Dave.  

Independent Contractor or Employee?  Underfunding Trust Funds in Colorado or NOT?  Underfunding Tax Liabilities or Not?  I think we all will find the real answer to these questions before to very long. 

I actually thought of writing each one of these types of blogs for every day for a year. Now wouldn't that be a kick!  I do hope the IRS does look into this situation now that it's about tax time and I have a hard time with having the burden of paperwork with my taxation and the expense of the social security part.  I do not believe for one that I was ever an independent contractor.  just a salesperson running lead for Neptune Society.