Salary (percentage) Payment for H1B Consultants

[danageri]

Hi,

 

I am a consultant and recently started working on H1b in Pittsburg, PA. My employer says he will be deducting followings from my payment : Social Security Tax (6.2%) Medicare (1.4%) Federal Tax (10.46%) and state tax (4.65%). I am aware of these deductions.

 

But he is also telling me that, an amount of $5.7 will be deducted per hour (approx. $11,000pa) for followings:

 

Automobile insurance 

General Liability Insurance

Professional liability Insurance

 

and he says these are mandatory and I have to pay this amount.

 

so, if I am earning, $60 per hour on 80:20 basis, he says, following is the calculation:

 

Description                        Per hour

Earning                        $60

Insurance -

Auto, Gen, Prof            $5 ??

Gross Earning              $55

Employer Share           $11 (20% of 55)

my Share                      $44 (80% of 55)

   Deductions

   Social Security           $3 (6.2%)

   Medicare                    $1 (1.4%)

   Federal Withholding   $5 (10.46%)

   State Tax                    $2 (4.65%)

Total Tax                       $10

 

Net Earnings                 $34 per hour

 

 

so my Questions are:

 

1. is the calculation above correct??

 

2. why do I have to pay the General, Auto and Prof. insurance amount. I guess it is not mandatory(can I not opt for this?), if it is, then employer should pay it from his share of 20%. Please let me know your thoughts

 

3. Instead of my employer paying for these insurance from my earnings, Can I ask him that I will take care of this? (coz, he says I cannot do it and it has to be done by the employer ) OR is there any way that I can opt out of this?

 

4. my employer says, Medicare amount that is being deducted, cannot be accessed and it is only used if I am unemployed. I am really confused about this and my employer says this there will be no documents available on this? What is your thought.

 

 

 

 

 

 

 

[rohang]

salary u r getting as per u ($34) will make ur salary > what is mentioned on LCA? and is it more than what u have signed for in you offer letter? if answer of first yes, 2nd is not that important, but still.

 

Legally has to pay you more than what is on LCA, if he is doing it, then its not an immigration question.

[catx]

Hi,

 

I am a consultant and recently started working on H1b in Pittsburg, PA. My employer says he will be deducting followings from my payment : Social Security Tax (6.2%) Medicare (1.4%) Federal Tax (10.46%) and state tax (4.65%). I am aware of these deductions.

 

But he is also telling me that, an amount of $5.7 will be deducted per hour (approx. $11,000pa) for followings:

 

Automobile insurance 

General Liability Insurance

Professional liability Insurance

 

and he says these are mandatory and I have to pay this amount.

 

so, if I am earning, $60 per hour on 80:20 basis, he says, following is the calculation:

 

Description                        Per hour

Earning                        $60

Insurance -

Auto, Gen, Prof            $5 ??

Gross Earning              $55

Employer Share           $11 (20% of 55)

my Share                      $44 (80% of 55)

   Deductions

   Social Security           $3 (6.2%)

   Medicare                    $1 (1.4%)

   Federal Withholding   $5 (10.46%)

   State Tax                    $2 (4.65%)

Total Tax                       $10

 

Net Earnings                 $34 per hour

 

 

so my Questions are:

 

1. is the calculation above correct??

 

2. why do I have to pay the General, Auto and Prof. insurance amount. I guess it is not mandatory(can I not opt for this?), if it is, then employer should pay it from his share of 20%. Please let me know your thoughts

 

3. Instead of my employer paying for these insurance from my earnings, Can I ask him that I will take care of this? (coz, he says I cannot do it and it has to be done by the employer ) OR is there any way that I can opt out of this?

 

4. my employer says, Medicare amount that is being deducted, cannot be accessed and it is only used if I am unemployed. I am really confused about this and my employer says this there will be no documents available on this? What is your thought.

 

It sounds like your employer is questionable at best, and may well be disreputable, and even fraudulent.  In all my many years (15+) of working for various employers in the U.S. I have never had deductions for the company's automotive, general liability, and professional liability insurance (or even heard of it until now).  Such deductions may even be illegal as you are not the person being directly insured by the policies.  You should review the situation and the deductions with an employment / labor attorney and find a new employer.

[JoeF]

FICA taxes (social security, medicare) and federal and state taxes are required by law.

Anything else is some stuff the employer does.

[rahul412]

Automobile insurance 

General Liability Insurance

Professional liability Insurance

Did you asked your employer why you need to pay these never heard insurance??

Did you google it to find out what it is or does it exists in real world??

[danageri]

Thanks so much for your responses:

 

1. I asked my employer about why do I need to pay these insurance. He says it is mandatory. I also check with other employers whom I kno, they says that these are the insurance that is mandatory for a Consultant working in client location. But the amount (approx $5.7 per hour and $11000 pa) is borne by the employer from the 20% share. But in my case Employer is asking me to pay. This is strange. Can you guys also check with your employer if possible?

 

2. I googled about it and found some govt documents:

 

http://www.chulavistaca.gov/City_Services/Administrative_Services/Finance/PDF/ConsultantsProfessionalsInsuranceRequirements.pdf

 

 

[Attorney_25]

I am going to assume that $60/hour is not your earnings, but the rate at which your employer is being paid by a client for your services. To determine if you are being paid properly, you need to determine the Required Wage Rate, which is the greater of the Prevailing Wage for the position and the Actual Wage, which is the rate at which your employer normally pays their employees in the position and location. If you are the only person in the position and location, then the Actual Wage is the amount your emploer has offered to pay you.

 

It is normal for an employer to pay for their overhead out of fees received from their clients and to account for that overhead in determining employee salaries. However, an employee on H-1B still must be paid the Required Wage.

 

If prepared properly, the LCA should reflect the Required Wage in block F.1.

 

The employer is required to provide you with a copy of the LCA covering your position and work location.

[danageri]

@Attorney_25 thanks for the response.

 

I have an LCA copy and i am paid equal or more than LCA amount depending on the hours worked for the month. But my question is additional deductions that my employer is deducting from my pay, saying that it is mandatory and the consultant has to pay. So, my hourly wage is $ 60, and, on 80:20 basis, employer is getting 12$ per hour and he has to bare this unknown Automoile, General Liability and Perfessional Liability Insurance amount through his $12 per hour. and not ask me to pay additional $5/h

 

I guess, he cannot ask me to pay additional $5/h from my earnings and then deduct 20% on the remaining. This is my concern. When i checked with other consultant friends who are working on H1b, they say that they are not paying any additional amount to the employer for any of these insurances.

 

My employer also says that i cannot directly contact the insurance company, coz they will not give any information to me.

 

so, giving $5 over 20% share is not something that i have hear and seen about.

[t75]

You should be providing your own car and liability insurance. You were not planning on driving uninsured were you?  Are you driving his vehicle?

 

Professional liability insurance is expected in some professions. Exactly how it is paid should be in your contract.

 

If you signed a contract without reading it, shame on you.

[catx]

Everything posted (e.g."my employer also says that i cannot directly contact the insurance company, [because] they will not give any information to me") further indicates that the employer is extorting normal business operating expenses from the employee -- in this case the company's automotive, general liability, and professional liability insurance, on which the employee is not the policy holder, named in the policy, or a beneficiary.  The employer saying these deductions are "mandatory" further indicates that the company is less than reputable.  Unless these deductions were clearly itemized in the employment contract or agreement, and were explicitly agreed to by the employee (in signing the contract or agreement), they are far from "mandatory".

 

These type of so-called 'consulting' companies that try to put everything on the back of the 'consultants' so they do not have to risk any expenses and get all the profit need to be avoided completely.  When will foreign IT 'consultants' learn that this is not the way reputable businesses operate in the U.S., and stop letting themselves be taken advantage of just to be in the U.S.

[JoeF]

I agree with catx, this is obviously a fraud consulting company.

The OP should find a better employer.

[rahul412]

@catx : Are you saying that the policy holder on these insurances is not the employee but the employer himself??

Bcos I recently came across one incident where employer brought an insurance for himself (organization) but the premium was deducted from the employees paycheck.

[t75]

Find an employment law attorney to review your documents

[catx]

@catx : Are you saying that the policy holder on these insurances is not the employee but the employer himself??

[because] I recently came across one incident where employer brought an insurance for himself (organization) but the premium was deducted from the employees paycheck.

 

Yes, that is what I am saying. If the employee "cannot directly contact the insurance company, [because] they will not give any information", then that means that the employer (not the employee) is the policy holder, named in the policy, and probably the beneficiary.  The employee is not party to, nor gets any direct benefits from, the insurance.  An employer requiring the employees to pay for the company's insurance is WRONG, and arguably fraudulent.

 

Again, real, reputable U.S. employers do not operate this way.  Company insurance is a company expense and normal cost of doing business -- and not something that is put on the backs of the employees.

[JoeF]

@catx : Are you saying that the policy holder on these insurances is not the employee but the employer himself??

Bcos I recently came across one incident where employer brought an insurance for himself (organization) but the premium was deducted from the employees paycheck.

The policy holder of these insurances is the company.

The employee is not a contractor, so these kinds of policies wouldn't even apply to him.

Only the employer can sign such things for the company.

[nineballs]

I think, if you like the money which you are getting, then stick with your employer. If you don't, then you can switch to another one. We can discuss about right and wrong all day here. In the end, what matters is if your employer is willing to pay you what you want. I think he clearly gave you the maximum he can pay you. If you are not happy with it, just switch.

Its open market here. You don't like your employer, leave. Your employer doesn't like you, he will let you go. There is no right or wrong (Unless its illegal).

[rahul412]

I think, if you like the money which you are getting, then stick with your employer. If you don't, then you can switch to another one. We can discuss about right and wrong all day here. In the end, what matters is if your employer is willing to pay you what you want. I think he clearly gave you the maximum he can pay you. If you are not happy with it, just switch.

Its open market here. You don't like your employer, leave. Your employer doesn't like you, he will let you go. There is no right or wrong (Unless its illegal).

I think that's the reason why their is a lot of abuse in H1 program.

 

It might not be illegal but that's fraud. In other words you are encouraging the fraud activities.

[danageri]

@ all, thanks for the response.

 

I understand that these Insurances (General Liability, Auto and Prof Liability) are mandatory for consultants (I am not sure through). But i dont know if the premium amount needs to be paid by the employer or employee (consultant). In my case, $60 is my rate and $5 is deducted for these insurance. and after that my employer is taking 20% from the remaining $55.

 

So, i am thinking that, if at all premium had to be paid for these insurances, my employer has to pay from his 20% share.

 

Can you guys also check this with your employers, if you are working as a consultant on H1b

[JoeF]

@ all, thanks for the response.

 

I understand that these Insurances (General Liability, Auto and Prof Liability) are mandatory for consultants (I am not sure through). But i dont know if the premium amount needs to be paid by the employer or employee (consultant). In my case, $60 is my rate and $5 is deducted for these insurance. and after that my employer is taking 20% from the remaining $55.

 

So, i am thinking that, if at all premium had to be paid for these insurances, my employer has to pay from his 20% share.

 

Can you guys also check this with your employers, if you are working as a consultant on H1b

They may be mandatory for the employer, they are NEVER mandatory for the employee.

The employer takes the risks. That's why he is the employer.

[excelgens]

Hi,

 

I am a consultant and recently started working on H1b in Pittsburg, PA. My employer says he will be deducting followings from my payment : Social Security Tax (6.2%) Medicare (1.4%) Federal Tax (10.46%) and state tax (4.65%). I am aware of these deductions.

 

But he is also telling me that, an amount of $5.7 will be deducted per hour (approx. $11,000pa) for followings:

 

Automobile insurance 

General Liability Insurance

Professional liability Insurance

 

and he says these are mandatory and I have to pay this amount.

 

so, if I am earning, $60 per hour on 80:20 basis, he says, following is the calculation:

 

Description                        Per hour

Earning                        $60

Insurance -

Auto, Gen, Prof            $5 ??

Gross Earning              $55

Employer Share           $11 (20% of 55)

my Share                      $44 (80% of 55)

   Deductions

   Social Security           $3 (6.2%)

   Medicare                    $1 (1.4%)

   Federal Withholding   $5 (10.46%)

   State Tax                    $2 (4.65%)

Total Tax                       $10

 

Net Earnings                 $34 per hour

 

 

so my Questions are:

 

1. is the calculation above correct??

 

2. why do I have to pay the General, Auto and Prof. insurance amount. I guess it is not mandatory(can I not opt for this?), if it is, then employer should pay it from his share of 20%. Please let me know your thoughts

 

3. Instead of my employer paying for these insurance from my earnings, Can I ask him that I will take care of this? (coz, he says I cannot do it and it has to be done by the employer ) OR is there any way that I can opt out of this?

 

4. my employer says, Medicare amount that is being deducted, cannot be accessed and it is only used if I am unemployed. I am really confused about this and my employer says this there will be no documents available on this? What is your thought.

 

 

Hello,

 

We are an IT services company and we do sponsor consultants on H1B including H1B transfers. I am personally in this industry for 18 years and I can tell you that this employer is cheating you if he is charging you or any other employee for insurance. Yes, they do have to pay insurance premiums as per their client requirements. That premium can range from just $1500 to $10,000 depending on the kind of insurances required by their clients. But once you are paying that kind of insurance, it is for all your clients on an annual basis. If he charges you $5.00 per hour and let's suppose you were billable on a client project for the whole year (2000 hours approx.) then you alone would have paid the cost of his entire annual insurance for all his clients ($5.00 x 2000 - $10,000). All other consultants being charged by him at this rate are making pure profit for him. This is illegal and bad business practice.