Several weeks ago I was asked by a fellow freelancer if the agency we were working at paid overtime. I said "Of course, why?". He said that the freelance coordinator told him that this agency did NOT pay overtime. I explained that since we were classified as "Temporary Employees" who receive W-2 wages, it is a Federal law that once you work 40 hours in one week, anything over is considered overtime (and pays time and a half). Click HERE for more info.
It made me pretty mad that freelancers are being lied to about this. Not only are agencies still strong-arming freelancers over their rates, but now this? Of course agencies will do anything they can to limit a freelancer's hours to under 40 a week. Paying freelancers cuts into the agency's profit margin, and limiting their hours is simply cost control. But straight-out lying about overtime? This is complete bullshit.
Do your homework people. If you are serious about being a freelancer then you need to educate yourself. There is a lot to know about being self-employed. Don't take anyone's word for anything. Research, read, double-check and verify everything in order to protect yourself and stay profitable.
The first thing you need to know is that you aren't as profitable making W-2 wages as you are making 1099 wages. Don't take my word for it. Look it up. Compare the profitability of being taxed on 100% of your income (W-2 wages) as opposed to being taxed on a smaller percentage of your income (1099 wages with deductions). You'll see that W-2 wage earners make far less than 1099 earners. If you can find a nice balance of the two it isn't bad either. However these days that isn't so easy as more and more agencies are complying with IRS mandates regarding employee classification.
The following is a list (in no particular order) of some of the agencies in the area, and what type of wages they pay. Please note that this information may, or may not be 100% accurate as agencies change policies quickly. I'm basing this info off my own experience, and from info I have received from other freelancers. As I feel this is extremely important information I will do my best to keep it updated and accurate.
(*updated 4/17/11)
The bigger agencies:
Alcone Marketing Group (Omicom), W-2
Colangelo Synergy Marketing (Omnicom), W-2
Tracy Locke (Omnicom), W-2
Marketing Drive, W-2
Catapult Marketing, W-2 (via placement agency)
Ryan Partnership, (unknown)
The medium-sized agencies:
Source Marketing, (unknown)
Circle One, 1099
Concept One, (unknown)
Integrated Marketing, 1099
Amplitude Marketing, 1099 (allegedly you need an LLC to work here)
All of the small shops still issue 1099s which, depending on their staff, could be compliant with the IRS guidelines. Obviously these smaller shops won't give you the same hours or even rate as the bigger shops, but it's still 1099 income.
As I mentioned, I will make every effort to update this list, and verify what type of earnings are paid out. Feel free to post info about other big agencies that I haven't listed, or don't have current info for.
- Slim
I know this comment is way overdue considering the age of the article. (I am waaaay behind on my reading and blogging.) But I just wanted to make a correction: Catapult is not W2. They do pay their freelancers through an agency called G&S Technologies but they do not take taxes out of the check they pay. (They actually pay really fast, too - about a week or 2 after your assignment.) Since I have not freelanced there long enough to reach tax time with them, I assume G&S will 1099 me at the end of the year. They said they were treating me as a 1099 employee when I was set up. We'll see.
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