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Using LLC’s (independent contractors) as field crews.
Posted by dmyhill on January 6, 2022 at 7:13 pmDidn’t want to flame the new guy, as he seems nice, and he is just the kind of fellow that needs to be on this forum. But as quoted from that thread, I thought there might be something for us to learn, and something I wanted to ask in a new thread.Posted by: @k-huerthWelcome, please share more about Strand AE using LLC’s for field crews, I have never heard of this before. Do they have LS’s on staff that oversee your work?
Posted by: @elite1resolutionsPosted by: @elite1resolutions@k-huerth Yes, they have one they keep on staff to oversee all projects and sign off.
That should go in a new thread.
As it is, I have to be pretty deliberate to feel that I am actually having direct supervision of my direct hire field crews. I cannot imagine having X number of LLC’s (that might hire their own crews???) under me and still feel like the work was done under my direct supervision. But that may be a personal issue or limitation of my abilities.
I am more interested in the legality. If someone is under my direct supervision, can they also be in independent contractor? (Which I assume is for tax purposes?) Seems like a contradiction, and leaving aside the the board of registration, the IRS seems like they might have a say in the whole situation? There were tons of “contractors” at Microsoft that turned out to be employees according to the government.
I know that this sort of thing occurs in my state, and I saw some VERY bad work as a result, with a PLS in some foreign state with a WA PLS signing work (ALTA, of course) done by someone in WA. Not saying that this is always the case, but I very much got the sense that the guy signing the work just signed the work. Of course, I have made mistakes of my own, so a single case isn’t proof.
Is anyone a PLS where this model works? I am sure all sorts of us outside the system have a lot of skepticism, but curious if anyone here works as a professional in that situation?
james-fleming replied 2 years, 2 months ago 12 Members · 16 Replies- 16 Replies
Our BOR requires the licensee to exercise responsible charge. The IRS requires independent contractors to exercise independent judgment. The only way this works is if the LLC is limited to unregulated tasks.
In addition to this, the LLC has two problems here. First is insurance. You cannot get E&O for land surveying without a license. Second, you cannot form an LLC to perform surveying without approval from the Board or a certificate of authority.
The example is not in Idaho so these may not be problems. Our policies are modeled after NCEES so I suspect it is similar there.
I worked for a company that contracted certain services basically as a pass through, but that was to another PLS owned company, and it was with the knowledge of the client. It was a long time ago, but I think it was the sort of thing where he stepped in when we were too busy.
-All thoughts my own, except my typos and when I am wrong.I worked for a company that used many contractors, then with the passage of universal healthcare, most were hired by the company. Some weren’t happy since they were used to making double or triple their hourly wage, probably getting insurance from a wife or even parent’s policy.
I don’t know if it’s unethical or against the rules to sub out fieldwork to LLC’s, but it definitely has that sketchy feel to it, and makes you wonder why.
As far as the new guy here, why not just go work for a company that’ll hire you as a real employee instead? Unless it’s for the reason I wrote above, the big hourly rate.
If I wanted to get my license I’d be concerned about getting credit for experience when I was a subcontractor.
Signed up to this forum because this question… So I’m new here, and we’ll just wanted to say hi..
I currently own an LLC and operate with a small crew and provide drafting services, and on occasion field work for surveyors. Also engineers, but this is a survey forum.
My clients use crews on a contract basis, not just any crews though. These crews at least in part operate as an LLC as well. In doing so it doesn’t mean there is no oversight by the PLS/Engineer. My clients like many here runs a small survey firm that includes a handful of people. Together they are limited in what can be accomplished, but working with non-perminant employees enables him to dedicate himself to getting clients, and more work. He does get out every now and then, but working with qualified crews can be done.
From my standpoint, the data brought in is equivalent to any firm I’ve worked with.
Additionally I also know a company that provides “surveying services” to survey companies. He is doing well in the OG side.
As far as my Drafting and Design business, we to do well and this year is looking better….
My point being, if you don’t feel as if you could trust an independent operator… What about that guy you trust in your office now? If he said “I’m going at it on my own”, would he now not have the knowledge and experience you trust?
What I can testify to.. Every legal description I’ve written was reviewed, every boundary, ALTA was overseen and every site design and subdivision design was done in cooperation of the engineer. There is just as much, if not more, oversight on the work being done with this ragtag group of LLCs as with any of the major firms I’ve worked for.
I’m not saying every independent LLC is golden, but neither is every fulltime employee. If a LLC is successful, that might be a sign of quality.
@marine2844 In CA if you offer surveying services you MUST be licensed AND the owner or a partner in the company. Joe Contractor can’t just hire a surveyor and offer surveying, even if the employee is licensed to practice. Also, in CA a licensed Surveyor can’t form an LLC for his business.
You can get quality survey work from an independent contractor, sure. It may be totally legal in your state. As far as I know anyone can offer drafting services.
- Posted by: @k-huerth
You can get quality survey work from an independent contractor, sure. It may be totally legal in your state. As far as I know anyone can offer drafting services.
What’s the difference? If a survey is prepared, surely the drafting and map making are integral to the final record.
-All thoughts my own, except my typos and when I am wrong. A big difference is the LS can review every aspect of the drawing and assure it is made the way the LS wants. If using contract field crews the LS has much less control.
The Board requires the LS direct charge. The IRS says if the LS is in charge of methods, the crew are employees. If they are independent contractors, the LS is not in direct charge. Catch 22.
.- Posted by: @bill93
A big difference is the LS can review every aspect of the drawing and assure it is made the way the LS wants. If using contract field crews the LS has much less control.
The Board requires the LS direct charge. The IRS says if the LS is in charge of methods, the crew are employees. If they are independent contractors, the LS is not in direct charge. Catch 22.
I agree.
-All thoughts my own, except my typos and when I am wrong. In this economy, we very selectively offload some items to other firms. They are items that, while we are capable, are not our main focus. Examples include straight-up topographic work (ie. w/ no cadastral component), construction layout (ie. curb, lights, etc.), or establishing of an on-site BM where PPP is acceptable. We worked w/ the main partners in this firm at a prior firm before they cut out on their own. We had helped implement their current procedures while we worked with them at said previous firm so we know how the work is being performed and what we are getting with the deliverables.
We also subcontract out certain cadastral drafting to someone we worked w/ previously at another firm. There is such a backlog, he cut out on his own.
In both cases, the subcontractors are firms/people we have a history w/ that we trust. We have others in the company asking why we don’t further subcontract out other things. We would not have as much oversite, would not trust the work, and would not feel comfortable putting our name on it. At the end of the day, it is still *your* name on the plan.
Seems like this came up years ago in Florida. As I remember there were temp agencies that had field crews you could hire on a needed basis. So lets say you got a big contract for a gas pipeline or something then you could hire the seven crews for 6 months. I remember it used to make me mad because you’d go after a job with in house field crew capability and some other firm without it would win the proposal and just hire the crews from a temp agency. Although I digress…. As I remember the temp agencies won as they were not considered practicing surveying. Also a lot of companies are set up where the employees don’t actually work for the company but another entity. Think of Doctors in a Hospital. Not sure if that was at the appellate level or not down there and I have slept a few times since then so I may have so I may have some of the details off.
Knew of a case that went on for decades. A licensed land surveyor became good friends with individuals working for the DOT early in his professional career. Made DOT work his bread and butter. By the time I came to know him he had seven crews. Most of his own time was signing off on section corner reports and signing off on more contracts with the DOT. He rarely left his office other than to schmooze with the newest DOT employees.
Each crew had to do their own thing. The boss clearly could not spend significant time overseeing their work, even if he really wanted to do so. How does this differ from hiring seven LLC-type unlicensed technicians?
The fact we choose to ignore something doesn’t make it right. Self policing fails because nobody wants to be the bad guy.
- Posted by: @bill93
The IRS says if the LS is in charge of methods, the crew are employees
Not necessarily.
The IRS has a three part “test” for determination if a person is a contractor or employee: behavioral control, financial control, and relationship between worker and firm. Each of these three parts are determined by a number of variables. The PLS controlling the methods to perform the work is only one of the possible questions under one the sections, behavioral control. Since circumstances for every firm will vary, they have developed form SS-8 that you can submit and the IRS will make an employee or contractor determination.
My rough understanding is that in the two following examples:
a) Survey firm provides training, and equipment for a crew chief. Firm hires the second crew member. Determines the methods of work. Requires attendance at meetings. Sets work hours. Crew represents firm (drives vehicle with company name), works solely for the firm.
b) Crew chief has his own equipment and vehicle (or leases it). Is paid a set amount and hires helpers on his own. Sets his own schedule (dependent , of course, on survey firms schedule for competing the work), arranges and pays for his own travel expenses (negotiating a per diem with the firm), provided similar services in the tax year to more than one firm.
The IRS is likely to determine that “a” is an employee and “b” is a contractor.
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