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I think everyone's gettin it twisted, the thread is about employees for a skateboarding brand. NOT team riders, as James said team riders are independent contractors which means they literally work for themselves.
is this how the skaters feel? i feel like a lot of them would be insulted if their home companies thought of them as that interchangeable
Sorry this is long but I hope it sheds some light to people who are unfamiliar with what some of this stuff means. If you already know about or don't care about independent contractors, don't bother reading this. If you plan on being a sponsored skater, read the basic tips below and do a lot of research before signing anything. Definitely hire a lawyer to review and help negotiate the contract if you can.
Being an independent contractor doesn't mean you're interchangeable. You still enter into a work/compensation agreement with a company and sign a contract, but you are not an actual employee of that company, you're essentially freelance (but have agreed to criteria similar to that of an employee). I'd also bet that not every company uses the contractor system, some might actually be employees, I don't know.
For the contractor this means a few things- they generally invoice their work and the invoices get processed and paid out in full (no tax deductions). Because the skaters are essentially their own business entity, they are expected to claim and pay tax on their income in a lump sum at the end of the year instead of the company deducting it incrementally from each paycheck. This is why many paid skaters have tax problems. Since you are not an employee the company is not required to provide health insurance either, as it would for someone on full time payroll. This is why many skaters don't have health insurance, it's their responsibility to purchase it themselves.
A smart independent independent contractor factors these things in when negotiating pay:
1.) Tax rate. Independent contractors are taxed at a higher percentage of income. Expect to pay 30-40% of your income back at tax time. As a business entity though, you can also claim many, many more basic expenses. A smart contractor can actually do well during tax season, but most get bent over because they don't know how to make the system work for them. I hire game testers as independent contractors. Because of that I choose to offer them $14-15/hr instead of a standard $11-12 because I know they will have high taxes. However, many companies won't do that and will try to save money on people who don't understand the contractor agreement by paying them an industry standard wage.
2.) Cost of privately purchased health insurance. Don't outright say you skate for money, you would never be able to afford the premium. Use tactful wording and say something like you're an independent advertising/promotions specialist. :p
Generally speaking, companies can choose to offer insurance and other benefits to contract employees, but they're not required to, and I don't know if independent contractors would be eligible (it's different than being a "contract employee," which is generally someone filling a temporary position but they get paid and taxed like a regular employee).