Q: I applied for a position last fall and in the next two months had seven interviews — one with the recruiter and six with the hiring department team. In March I was asked to complete an “assessment” consisting of my recommendations on four different hypothetical situations. They paid me $500 for this work. They want me to do another four interviews this week.
Also, and perhaps most disturbing, the position is still posted on the company’s career site.
I’ve hired a couple-dozen folks in my career, and I never put anyone through this type of scrutiny. My fear is that this drawn-out process is a sign that they really don’t know what they are looking for.
A: I suspect they know exactly what they want: someone they can get work out of without having to go through the hassle of hiring, onboarding and paying for benefits and payroll taxes.
So-called “working interviews” let employers see prospective employees in action, demonstrating their skills instead of describing them. According to Declan Leonard, a partner at business law firm Berenzweig Leonard, working interviews are legal as long as the applicant is getting paid and the payment is equivalent to or greater than minimum wage.
“But you can’t get away with that on a prolonged basis,” Leonard warns, especially if the employer is having an applicant perform substantially the same work as its current full-time employees. That could violate Labor Department rules on worker classification.
Working interviews can also undermine the employer in other ways. As you noted, having you repeatedly come in to interview and demonstrate your skills with no clear agenda gives the impression that the employer is indecisive and lacks a clear vision.
Also Leonard notes, the employer’s confidential information could be at risk. Unless you’ve signed some kind of nondisclosure agreement, you have no obligation to protect confidential or proprietary information you may come across in the interview process. If you were to infer damaging information about the employer from those “hypothetical” situations you’re being asked to solve, what’s to stop you from sharing that information with a competitor?
To be fair, some workplaces have legitimate reasons for putting candidates through intense scrutiny, and there’s no reason for them to stop advertising the position until they fill it. But stringing you along is a bad sign. If you still want to work for this employer, you have the right to inquire about their hiring timeline and next steps — and diplomatically decline to perform more “assessments” if you suspect their only purpose is to get cheap labor out of you without a commitment.
It baffles me that an employer in this market, when so many jobs are going unfilled, would hesitate to snap up a candidate — unless perhaps it can’t afford the wages workers are demanding. That’s another red flag.
A taxing method of giving bonuses
Q: At a former employer, I was entitled to semiannual bonuses. Most of the time, those bonuses were paid via payroll; taxes were withheld, the employer kicked in their share of payroll taxes and I received more retirement-plan matching. However, one year, they delayed the midyear bonus and paid it at the end of the year via a check independent of payroll. They issued me a Form 1099 listing the payment as “nonemployee compensation.” That means I ate the employer half of payroll taxes and missed out on the extra 401(k) match. It was not a huge amount, but the retirement money is a big deal to me. I have also heard rumors that this is done routinely for other employees when paid overtime.
Is this legal? Should I be doing anything about it?
A: As with the previous question, this sounds like a case of an employer that wants both the labor benefit of full employees and the lower overhead cost of contractors. Unfortunately, they can’t have it both ways.
When you’re an employee, anything your employer pays you in relation to the work you perform is, by definition, employee compensation, subject to employment taxes. “You’re going to have an employee get a W-2 and a 1099 at the end of the year, and that’s going to raise red flags with the IRS,” says employment-law specialist Declan Leonard. The bonuses should have been reported as W-2 employee income, as should overtime pay for other full employees.
I know you’re more concerned about the lost 401(k) match, but that’s not as black-and-white as the tax issue. According to Leonard, sometimes 401(k) plans are set up so that any matching contributions from the employer come out of regular paychecks only, not out of bonuses. Whether you’re entitled to that match depends on the plan rules.
You might want to schedule a consult with a lawyer specializing in tax and employment issues about whether you’re entitled to reimbursement for the tax you paid and the match you missed out on. You could also tip off former colleagues so they can make sure they’re not being overtaxed on bonuses and overtime pay. And whether you take legal action yourself, or let the matter drop, the IRS would probably want to know what this employer is up to — if it hasn’t already noticed.