Has anyone run into a client that participates in a 14C Workshop (the employer can pay them sub minimum wage due to them having a disability) for work they complete. This client was issued a 1099-MISC and by all IRS standards, they should be considered an employee. The employer says this is how they've been operating for over 20 years and because of the program, they do not have to withhold Medicare and SS.
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Well, AI says it should've been Form W-2, but most of what I find talks about the employer getting the 14C certificate and not what he owes his employees.
AI Overview
Yes, employers who pay subminimum wages to employees with disabilities must issue W-2s to them, just like they do for other employees.
Explanation- Section 14(c) of the Fair Labor Standards Act (FLSA) allows employers to pay workers with disabilities less than the federal minimum wage.
- The Department of Labor issues certificates that allow employers to pay subminimum wages.
- However, the Department of Labor has proposed to phase out the issuance of these certificates.
- Once the phaseout period ends, employers will no longer be able to pay subminimum wages to workers with disabilities.
The FLSA establishes minimum wage, overtime pay, recordkeeping, and youth employment standards. -
I called the agency that handles the 14C workshops on this yesterday and they basically walked through the IRS classification questions, which I already knew, and it turned into "Do you want to file a formal complaint?".Comment
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The 14C employer can only exempt earnings from FICA taxes, if the employee is classified as a trainee. In either case I believe the worker should be paid on a W2, as he is an employeeComment
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