Artists fights back against MBO and Yurkor Employers of Record
This came into the blog as a comment on the EOR thread, but I thought that the content was strong enough to warrant placing this important information on the front page.
Hey Guys,
Wanted to pass along this email I just sent out to a lot of my freelance friends. Some Very useful information for those of you looking to take action against MBO/YUCOR. Please read through carefully!!
Hey Guys,
So I’m sure everyone’s been dealing with or at least heard about the whole MBO/Yucor fiasco. While the best ways around their policies at the moment are either to go through the process of incorporating and all that it entails, jack your rate up by an amount that somewhat compensates your loss, or just avoid dealing with those companies all together, my buddy has been digging up some more info on the companies that I wanted to pass along. He’s been speaking with his accountant and attorney about the procedures MBO/Yucor use and it’s pretty interesting stuff for those of you looking to take some action. I’m attaching all the emails he sent me. I’d recommend reading through them! Please forward to anyone that could use the info!
I just got back, from my accountants, figuring out my taxes and then i showed him the yurcor stuff thats been happening – how we filled out a w-4, which makes us an employee of yurcor, but then they took out employer taxes still and our that money didnt show up in our gross pay pay stubs. Anyway, he said what they’re doing is illegal and can’t believe they’re getting away with it. Then he laughed when i told him they were telling us to scan our writeoffs for their approval!
He said he actually has a client, in New Jersey, currently going through the same situation, not with yurcor in particular, but still how they were taking away funds as an employer when they shouldn’t have and the New Jersey Dept of Labor got them their money back. So he said contact the NY City (or state?) Dept of Labor telling them of the situation. It gets a bit sticky since Yurcor is supposedly based in Florida (according to their tax forms we got) and the DK i worked for is based in chicago so the NY Dept of Labor may think it doesn’t have anything to do with them since those are out-of-state companies. HOWEVER, yurcor/dk paid NY state wages and withheld NY state taxes which makes it a NY Dept of Labor problem. By taking away employer taxes (which are rightfully ours), they are taking away money from NY state since that should ALL be our money that NY state taxes and we receive. Our loss of income is actually the states loss of income – make sense? Look at your pay stub and you’ll see the only income listed is just the employee section and nothing is reported of the employer income – ILLEGAL. The employer tax they are withholding is actually helping to pay DK’s taxes. It gets even funnier because Yurcor uses the pay service ADP to cut us our checks. WTF? ADP does the SAME kind of service Yurcor does just NOT shady. How so? We called them up and i was doing some research on the ADP website. They provide the same sort of service as yurcor, but when we explained to them what Yurcor was doing they were completely baffled since we are classified as yurcor employees. Put 2 and 2 together and you see that ADP has been handling the ‘employee’ part of the pay that yurcor has been reporting to them, which sounds legit. This employer part is the scam that yurcor is helping front for DK and these other studios to help pay for their taxes (which other freelancers have started to figure out correctly).
Anyway, 2 accountants at the firm we were at said to contact the NY City Dept of Labor and see if they have a ‘wage and hours’ division. Thats what New jersey has that helped get their jersey clients their money back. If for some reason this doesnt work, he said DEFINITELY contact the IRS. Also, besides the IRS contact the National Labor Relations Board (http://www.nlrb.gov/) to get on Yurcor’s ass (and mbo for that matter). Either way, they all agreed what Yurcor is doing IS completely illegal and all that employer money being held is rightfully ours. Their clients have won the case in Jersey so we should win ours. If we can spread the word around, a bigger force in numbers always helps. If this sounds confusing feel free to contact me and i can better explain what went down at my accountants office today. I feel a lot better about this all, but i’ll feel much better once i get my money back!
spread the word! i’m contacting the dept of labor this Monday. I’ve already saved all of Yurcor’s payroll information they provide on the sites that show all the employer taxes they withheld. Great to have since our paystubs don’t mention any of this.
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Here’s links to all the places they recommended contacting. Might as well contact them all so they all hit yurcor and mbo at once!
http://www.labor.ny.gov/agencyinfo/aicontactus.shtm
http://www.nlrb.gov/about_us/locating_our_offices/index.aspx
http://www.irs.gov/localcontacts/article/0,,id=98318,00.html
seriously, lets get this ball rolling.
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So the accountant said the first people to contact is NY Dept of Labor to see if they will do anything about this since it IS their problem. The lady at first tried to tell me we aren’t covered under NY State law since we got paid daily wages and that there was nothing I could do except hire an attorney and take them to court. Before she hung up on me I told quickly told her i signed a w4 form with the company making me an employee and i got an end of year w2 tax form showing employee taxes they withheld, but it didn’t show the employer taxes they withheld, which they shouldn’t have since i am an employee and since it was NY taxes being withheld this is a Dept of Labor problem. So she then directed me to this PDF complaint form and where to send it to. She said when you fill it out and mail to them, you must have ALL your proof. The IRS tax forms (i guess thats the w2), but i’m also including scans of my pay stubs and their online payroll tax withholding breakdowns. I suggest you do the same and pass the word around. The next step would be to contact the NY State Dept of Taxation and Finance because their site will really pursue if “your situation represents a systemic flaw that may adversely impact other taxpayers” & “You believe that the unique facts and circumstances of your case warrant assistance by the Taxpayer Rights Advocate” which it does.
DIRECT PDF FORM:
http://www.labor.state.ny.us/formsdocs/wp/LS223.pdf#page=1
information:
http://www.labor.ny.gov/search/search.asp?query=ls223&submit=GO
mail to:
New York Dept of Labor
Bldg 12, RM 185C
Albany, NY 12240
I also found this:
http://www.labor.ny.gov/ui/MisclassificationofWorkers.shtm
this is the real issue. We shouldn’t be going after MBO, but the businesses USING MBO.
We should be going after MBO as well, since they claim us as employees, but tax us like independent contractors.
Other staffing companies don’t practice what MBO practices, probably because they KNOW IT’S WRONG.
Agreed, they are both in the wrong here. Something MUST be done.
I am incensed at Yurcor and MBO taking advantage of freelance artists. This is going on in Los Angeles as well. I too verified on both the CA Dept of Labor and IRS websites that it is the employer’s responsibility to pay Workers Comp, FUTA, SUI, and half of FICA. If you’re on a W-4, Yurcor is your employer, plain and simple. I have found the form for filing IRS complaints. You print it out, and you can FILE ANONYMOUSLY! thank goodness for whistle blower protection laws!
So let’s get these bastards!!
http://www.irs.gov/individuals/article/0,,id=106778,00.html
Click on the PDF for form 3949-A.
I think False Deductions is a good box to check off. Maybe Unreported Income, for their shady way of rejiggering the numbers for your business expenses. And maybe check off Other and just put plain Fraud? I think it would be lovely if someone crafted a pithy statement of the facts in one or two paragraphs and posted it here, so we can all print it out and attach it to our complaint forms. The more complaints we send in, the faster we can TAKE THESE *SSHOLES DOWN.
I just found this and am reposting. Original source:
https://be.freelancersunion.org/forum/topic.php?id=958
Since my last post about Yurcor, I’ve found some more information about how they operate.
According to the IRS, it’s illegal to charge W2 workers the employer taxes that Yurcor deducts from a freelancer’s pay.
Instead, they simply have LOWERED the wage of freelancers by the amount of the employer taxes, which is about 10% of the agreed fee.
It may seem like splitting hairs, but it’s enough of a distinction that they can get around the tax law, and have freelancers pay the employer taxes.
Then they tell the freelancers that the employer taxes and the employee taxes they are paying are roughly equivalent to the Self Employment Tax in order to suppress any new wage negotiations that might happen.
But there’s still enough of a difference that after taxes, a Yurcor W2 worker who was formerly 1099 might have a couple thousand dollars less than they used to at the end of the year.
Yurcor themselves confirmed that this was how they handle the finances.
Lessen learned: get a contract that guarantees you a certain wage. Do not agree to a fee, because Yurcor will deduct all sorts of administrative expenses from the fee. What is left over will be your actual wage. Instead, insist on clarifying the wage you will receive.
BTW, the US doesn’t have a law that says employers have to consult you before dropping your wage, as long it’s above minimum wage. They do not even have to notify you, which is why I think there was so much confusion about pay when freelancers sign up with these employer of record companies.
For your own protection, get a contract.
I am glad to see others are not taking this lightly, also. I just sent Yurcor a certified letter asking for payment of employer-side taxes and worker’s comp that were deducted from my earnings.
I printed their statements and highlighted my day rate, as well as the instances of subtraction in question.
If you log onto your account, you can select timesheet report and transaction report (one at a time) select the default date range (1/2000 – 1/3000) and hit “filter.”
The timesheet report shows the day rate, and at the bottom, the total earnings. However, specifically on the Transaction report it has line items for where each instance of employer-side taxes and workman’s comp was taken from my earnings. I personally believe this is enough to pursue this matter legally. I read on the freelancer’s union site where they can lower our rate w/o telling us, legally. However, on all of my account information with Yurcor (timesheet, transaction) it shows this money being deducted from my earnings–not before! Also–my start-work contract states a rate I would earn each day. And that’s in writing!!!
From the sound of things–and the size of the last job I worked on–if it is a legal matter, I would bet it warrants class-action.
These people were sick–sending an email suggesting employees claim “9″ on their W-4 if they’re unsatisfied with the amount of taxes being taken out.
I will keep you posted.