The Virginian-Pilot
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Xe Services, the security and training company formerly known as Blackwater, faces a $60 million class-action lawsuit for allegedly depriving its workers of employee benefits to which they are entitled.
The lawsuit was filed this week in federal court in Washington on behalf of more than 3,000 people who have done security work for the company in Iraq, Afghanistan and elsewhere since 2001.
It alleges that the Moyock, N.C.-based company improperly classified the workers as independent contractors rather than employees and failed to pay Social Security taxes, contribute to state unemployment funds or provide health, disability or pension plans.
"Billions of dollars are lost each year to the federal treasury as well as to individuals due to misclassification of employees as independent contractors in order to avoid paying lawful taxes, withholding, and plan benefits," the lawsuit says.
Many workers have come home from war zones physically or psychologically wounded and have been denied health care because of the alleged misclassification, the lawsuit says.
There are four named plaintiffs in the case. One of them, C.J. Mercadante of Miami, has received a determination from the Internal Revenue Service that he was an employee, not an independent contractor, for purposes of tax status, according to the lawsuit.
If that ruling is applied across the board, thousands of people will have to file amended tax returns, said Scott Bloch, the Washington attorney who filed the lawsuit.
"These brave individuals... deserve better than to be turned away without health insurance, pension benefits, unemployment benefits, and other withholding afforded to Blackwater's other employees," Bloch said in a statement.
A company spokesman had no comment on the lawsuit.
This is not the first time the issue has arisen. A congressional committee chairman accused Blackwater of tax evasion in 2007 for not classifying its security workers as employees.
Bill Sizemore, (757) 446-2276, bill.sizemore@pilotonline.com
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Whats the Difference between a Soldier and Blackwater
Ok lets break it down for you..
1) Gets paid for your service: US Soldier (YES) Blackwater (YES)
2) Had to Volunteer: US Soldier (YES) Blackwater (YES)
3) Had to take an Oath to
the US Government: US Soldier (YES) Blackwater (YES)
4) Got paid by US Taxpayer: US Soldier (YES) Blackwater (YES)
5) Weapons issue by US Govt: US Soldier (YES) Blackwater (YES)
6) Trained by the US Govt: US Soldier (YES) Blackwater (YES)
7) Took orders from the Govt: US Soldier (YES) Blackwater (YES)
8) Could carry loaded
weapons anywhere to include
the US Embassy and Military
Bases & had Diplomatic
Passports: US Soldier (NO) Blackwater (YE
1099 vs. W-2
These "contractors" should be classified as employees. Follow the IRS 21 step test and you will agree. http://www.valdosta.edu/finadmin/human_resources/documents/IRSFactorTest_000.pdf. Who cares what we think anyway because, according to the article, one guy already has the IRS ruling that he should have been an employee.
Most companies would love to hire all subcontractors to get away from payroll taxes and benefits but that is not within the IRS guidelines. The VEC and IRS are cracking down on these violators and when they reclassify, it will cost the violators dearly.
blood money
Blackwater/Xe is a war profiteer that made billions on these bogus wars. The greed of the military industrial complex never ceases to amaze me.
More Half Truth
"It alleges that the Moyock, N.C.-based company improperly classified the workers as independent contractors rather than employees and failed to pay Social Security taxes, contribute to state unemployment funds or provide health, disability or pension plans."
When they are classified as independent contractors, the ICs themselves are responible for paying taxes and paying into their own retirement programs. That is part of the reason they make so much money while deployed. The government already received all the money it should have.
How would you "contribute to state unemployment funds" when these ICs live all over the country? Besides, as ICs they are part time employees and not eligible for unemployment benefits.
You are right in that ICs
You are right in that ICs are responsible for paying both the employee and employer portions of FICA so the government gets the same money either way. Also, if there were no benefits, these people would have known when they first started working there. So as far as I am concerned, none of these issues mean much. However, businesses don't get to just choose whether the people that work for them are employees or independent contractors. If it were their choice, almost all businesses would classify their workers as ICs. There are rules concerning this mainly dealing with how much control does the business have over the worker. Note that in the article, the IRS ruled in one case that the person was an employee, not an IC.
New Labor World, "Obamacare", sung to "Oh Canada!"
The word has been getting out for over two years. Businesses of all sizes are looking to either hire 1099's solely or subcontract to another 1099 temp provider. The unemployed are desperate to earn a living, try to maintain and business owners are desperate to cut costs and protect themselves from higher taxes and the soon coming Obamacare $mackdown. Union workers be prepared to get hammered by 2017. When the Verizon/CWA contract expires less than 60 days from now and if a strike occurs, rumor on the street is any out of service copper customers will be offered a cellphone and an aircard if they have dsl too, until fixed. By then they may want the wireless setup instead and cancel the copper service permanently.
Just follow the money
Many, many MDs are independent contractors. Where is the outcry! The only one making money on this one are the lawyers....
many
many, many attorneys are independent contractors (and make less than MDs)...where is the outcry?
Just follow the money
Many, many MDs are independent contractors. Where is the outcry! The only one making money on this one are the lawyers....
Duck Test
If it quacks like a duck, looks like a duck-it's a duck guys. These were Erik's and Gary's employees. Now, former Atty. General John Ashcroft works for them so they can really break the law.