Can Surveyors Legally "Subcontract"?

Texas has the following rule regarding contract crews, however I would have to research it out as to sub-contracting individual persons. The IRS is pretty strict in what they consider a sub-contract employee, in that most I have seen would not meet the definition if they use your equipment.

(f) Any firm furnishing contract land surveying crews to persons, associations, partnerships or corporations not licensed or registered under this act must have a registered professional land surveyor as a full-time employee in that firm as reflected in its registration form filed with the board. A full-time employee is an individual employed by a company in an on-going position with a minimum of 35 scheduled work hours per week, 52 weeks per year.

This comes up every now and then in Texas. I recall back in 1995 the Texas Board of Professional Surveyors issued a memo that the practice of hiring contract crews was prohibited. In particular, there was a contract guy in Houston that they wanted to shut down. They issued a show cause and he got an attorney. In the end, the Texas Attorney general issued an opinion that the practice was legal. It was rumored that Engineers Lobby issued a letter to the AG in full support of the practice. It seems that topography surveying is regulated under the Engineers Act, not the Surveyors Act.

We use field crew personnel on an as needed basis and thankfully have a couple of guys that are okay with having occasional periods of no work. They are employees just as if they worked for us full time. Anyone we hire, even if it is on a trial basis and turns out to just be for one day gets "hired" with all the paperwork (it doesn't really take that long to fill out).

I used to classify these trial run guys as "Casual Labor" and thought that as long as I made a decision about them before I paid the threshold amount ($650?) that it was legal. But my accountant told me otherwise - casual labor cannot be any for anything related to what the company produces or service it provides and cannot be used by a corporation in any case.

We use Paychex which works really well. It is $69 a month as long as we don't have more than five different employees receiving a paycheck in that particular month. The good thing about Paychex (or any payroll company probably) is that all of the corporate payroll taxes get taken and paid when we do the payroll run. So we are not faced with a high tax burden at the end of a really busy month. It's a bit easier to swallow this way.

"Chapter 11 of Title 34, Code 1975, deals with the professions of engineering and land surveying and regulates who may engage in these professions. In general, only registered land surveyors may perform land surveys. However, pursuant to § 34-11-14(2), Code 1975, there is a limited exception to the registration required of persons who engage in land surveying. Specifically, the nonregistered employee of a registered land surveyor may engage in such work if it “is done under the responsibility and supervision” of the registered surveyor. § 34-11-14(2), Code 1975.1"

but, as stated above in the article. In order to practice under the guidelines, in any state, all work is done under the "responsibility and supervision" of a surveyor. That to me would include all field work and drafting. If this is the case then a surveyor cannot sub-contract work to anyone unless they have a licensed surveyor supervising the work being completed, not just the results...

I think many are missing the point. The issue is whether the person is classified as an employee or a contractor. As a contractor, they are responsible for paying their own self-employment taxes, social security, etc. As an employee, the employer is responsible for the witholding and payment of the taxes.

Yes, any subordinate doing work for the land surveyor must be under their direct supervision. Whether that subordinate is a contractor or an employee is irrelevant. The surveyor is the person ultimately responsible for the work and must be in direct supervision. That doesn't mean that the surveyor must stand behind the draftsman and direct every movement of the pen. That doesn't mean the surveyor must follow the rodman around in the field and direct every shot. That doesn't mean the surveyor can't subcontract another firm to provide its employees to perform the work. It doesn't mean the surveyor must only use direct employees. Those two have no connection with the ultimate responsibility for direct supervision.

The board yammering in TX and many other states can clearly be seen as an attempt to interfere with free trade. Simply claiming that the licensed professional can't be trusted to provide direct supervision of a contractor is an open declaration that licensed professionals can't be trusted to perform the work they are qualified to perform. If that is true, then the licensing of surveyors has failed to protect the public. If false, then we need to develop more respect for each other and promote good business practices.

JBS

I have had this discussion many times. I believe the issue is really with IRS, not the state registrations boards. Sub-contractor/independent contractor is a way for you to avoid having to carry unemployment insurance, pay your share of FICA, health insurance, etc. I believe this is a viable alternative to a regular payroll for most professions, but not surveying due to the requirement that work be supervised by a licensed land surveyor. If you are supervising and controlling what the "independent contractor" is doing, then he is not independent in the eyes of IRS, and, if audited by IRS and they found that your "independent contractor" did not meet their definition, as the article say, you are subject to fines, payment of past taxes etc. From a State Registration standpoint, as long as the work is supervised by the licensed land surveyor, I am not sure whether they would care whether they were employees or sub-contractors... just my opinion for what it is worth.

Another way to look at it, at least in New York at the present time, the definition of surveying basically says measuring the earth's surface etc etc. So, if an individual is offering his services as an "independent contractor" providing survey measurement services, is he not offering surveying services and therefore must be licensed?

This is a dilemna for the contracting surveyor.

The BOR of registration says the contractor or employee has to have supervision.

IRS says the contractor is an employee if supervised. Regardless of how you
spin it, the contracting surveyor will pay taxes.

Regsrding agenicies, the IRS will come after you if the agency goes broke and
didn't pay their taxes.

Are nurses performing services that only a licensed doctor can perform?
Is a paralegal practicing Law?
Is a CAD designer practicing Engineering?

I would estimate that a lot if not most of the above are paid as sub-contractors. Are surveyors exempt from being able to hire and supervise sub-professionals? I know I am capable of doing such.

My old tax attorney summed up one big criteria to me kind of simply. If you direct an individual when, where, and how they will be working for you - they will be classified as an employee in the eyes of the IRS. Especially if they use your equipment & software.

If they provide you with a product on their own schedule and in their own manner, even if you are supervising the end product, then they can be a 1099 contractor. It's even better if they do similar work for other people/companies.

The best way is never let them get over $600/yr.

I have a co-worker who's wife is a paralegal. She is the one at her firm that prepares the briefs and other work products that the attorney will review, revise and sign, just like how us professionals use our survey techs and CAD techs to prepare maps.

> Another way to look at it, at least in New York at the present time, the definition of surveying basically says measuring the earth's surface etc etc. So, if an individual is offering his services as an "independent contractor" providing survey measurement services, is he not offering surveying services and therefore must be licensed?

Not if they're performing the service under the direct supervision of a licensed surveyor who hires them to perform the work.

JBS

> This is a dilemna for the contracting surveyor.
>
> The BOR of registration says the contractor or employee has to have supervision.
>
> IRS says the contractor is an employee if supervised. Regardless of how you
> spin it, the contracting surveyor will pay taxes.
>
> Regsrding agenicies, the IRS will come after you if the agency goes broke and
> didn't pay their taxes.

We're mixing apples and cumquats here. You've got to regulatory agencies fulfilling two distinctly different roles for two different purposes. The IRS (really the department of labor) exists to ensure that the taxes are being properly withheld and collected. They really don't care whether the person is a contractor, employee, or who supervises them. As long as the taxes are paid, it's irrelevant. They don't care who is paying them as long as someone is.

The board is concerned that the surveyor must be in responsible charge of any subordinates doing the actual work. That requirement has nothing to do with contracting or employing the worker. Some boards seem to get hung up on micromanaging whether a surveyor can adequately be in responsible charge when subcontracting labor. I, personally, see no problem with it, but then I, professionally, take my charge seriously and maintain responsible charge.

Can a surveyor who subcontracts fail to maintain responsible charge? Yes. However, that same surveyor probably fails to maintain responsible charge over their employees as well. The problem has nothing to do with employment and taxation laws. The problem the board is addressing is a failure of the licensed professional to do their duty by maintaining responsible charge.

Two different issues that must be clearly separated.

JBS

We went over this pretty heavy in college about the minutia of differences between contract labor and employees.

The resounding difference is that you can't tell them how to do their job (instruct) only to tell them to do the job.

So, I contract a company to survey 100 acres. I tell him the scope of the job and he uses his equipment and men to do the job. I can't tell him to put a hub here and not there, but I can tell him that I want accuracy = to whatever.

Jeff is right about the 1099. You better have your ducks in a row lest the hour and wage folks beat you over the head.

Most of the time, it's not a problem.

John, you've summed it up quite clearly - twice. State BTR regulations do not equal IRS regulations. Who wants either of them looking into our business. I suppose that's why many of us will remain solo, then there is never any confusion.

The risk/reward quotient of playing the 1099 game can get high if somebody pushes the envelope. I don't think it's worth it myself, but I know many people who do. I think they see it as a buzzword that will work, as long as they don't get caught. All it takes is for one disgruntled "1099 contractor" to go to the labor board, then that "employer" is under the microscope. No thank you very much....

> We went over this pretty heavy in college about the minutia of differences between contract labor and employees.
>
> The resounding difference is that you can't tell them how to do their job (instruct) only to tell them to do the job.
>
> So, I contract a company to survey 100 acres. I tell him the scope of the job and he uses his equipment and men to do the job. I can't tell him to put a hub here and not there, but I can tell him that I want accuracy = to whatever.
>

Kris, I am no expert, so take that for whatever it's worth, but it seems to me that you need a properly written contract (maybe that is what you are saying). But if job requirements require a curb and gutter be staked by a particular design, and you have a minimum requirement of 20' offset hubs every 50', you certainly can tell them where to put a hub.

It seems to me that if you have that potential problem, that you write up a scope of services that absolutely requires them to do things a certain way and as approved by the signing surveyor. It seems to me that you can put in the task order that they do things as per the supervision and authority of the responsible pls. It seems simple, the licensed surveyor has to certify the work and that it was done under his supervision. The contract should reflect that.

But maybe my thoughts would be chewed up and spit out by an attorney.

I recommend reading Real v. Driscoll Strawberry Associates, Inc. (9th Cir. 1979) 603 F.2d 748, 754) in regards to the litmus test as to one is violating the federal Fair Labor Standards Act.

For California practitioners, an important read is S.G. Borello & sons, Inc. v. Department of Industrial Relations, 48 Cal. 3d 341.

I would like to add that the use of unlicensed surveyors under the guise of "independent contractor" is often not only violating labor laws, but is also harming the profession by empowering these unlicensed individuals to foster their business. In recent months I have come across 4 different individuals in our area who are performing unlicensed surveys, with their primary source of work coming from realtors. It is important to note that these same individuals also perform subcontract work for certain licensed individuals who are trying to skirt state and federal labor requirements. The relationships these unlicensed individuals have with the licensed surveyors, has provided the unlicensed individuals with the incentive to purchase equipment and gain an illegal market share of the surveying business.

The real harm is that the public is getting work done by persons who don't know what they are doing. If they knew what they were doing, they would be able to pass the licensing tests.

I know of 2 unlicensed individuals who are "subcontracting" to licensed individuals and are performing much of the research and analysis along with the field work. The licensed individuals are retiree's who see it as easy income to have someone do their work and all they have to do is sign the plats. Its criminal. It is the result of an environment that is fostered by those who mistakenly believe that unlicensed individuals can be seen as independent contractors, thereby allowing the unlicensed individual to pursue establishment of themselves as an independent business.

California has strict rules against unlicensed "independent contracting" but there are still many who fail to see the harm they are doing and simply plead ignorance to the labor laws in wanting to save the cost of workmans compensation and unemployment taxes.

> I would like to add that the use of unlicensed surveyors under the guise of "independent contractor" is often not only violating labor laws, but is also harming the profession by empowering these unlicensed individuals to foster their business.

That certainly sums up an even bigger issue than playing the 1099 game with CAD people, book keepers, or an occassional need for a field guy.

I agree 100% about the harm it does to the profession by utilizing the services of so called companies like that. Field crew's are one thing, but extend that into machine control and design TIN's. Not to mention GIS. All that is very real, even if a bit off topic here.

Good post cleacut.

One question I have is, if the work is sub-par, should the licensed individuals stamping to it lose their licenses or be held liable?

It seems to me that the subcontractors in this case should be doing what the licensed surveyor instructs them to do, and it is the licensed surveyor certifying to the work that has some or all of the liability for the unacceptable work.