unions

Edit: I completely missed this was Liberia… but if you find yourself in the same boat in the US I’ll leave the comment from before below.

That sounds like they’re playing fire with the IRS.

It does seem that they’re using other contracted companies as third parties to avoid this. Sounds like attorneys will be needed to try and help with this but it’s definite scummy regardless.

Are they still paying wages as if they’re employees or contractors?

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee

Generally, you must withhold and deposit income taxes, social security taxes and Medicare taxes from the wages paid to an employee. Additionally, you must also pay the matching employer portion of social security and Medicare taxes as well as pay unemployment tax on wages paid to an employee. Generally, you do not have to withhold or pay any taxes on payments to independent contractors.

There’s some tests of whether they’re “contractors” or “employees”. Including whether you control their schedule/work or not.

E.g. you don’t tell the electrician that they have to come in Monday-Friday 8 to 5 or it’s over. Because they’re not your staff. You can’t dictate that they use this or that tool as long as it’s within the specs of the standards or some contract. And if you’re controlling all of it to such a degree that they have no control over it then guess what? You’re approaching employee classification… and you better be withholding, etc as required by law.

Consequences of treating an employee as an independent contractor

If you classify an employee as an independent contractor and you have no reasonable basis for doing so, then you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). See Internal Revenue Code section 3509 for more information.

Relief provisions

If you have a reasonable basis for not treating a worker as an employee, then you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. You (or your predecessor) must not have treated any worker holding a substantially similar position as an employee for any periods beginning after 1977. See Publication 1976, Section 530 Employment Tax Relief Requirements PDF, for more information.

Common law rules Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of relationship: Are there written contracts or employee type benefits (that is, pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

It doesn’t help that they were staff who are now “contractors”. That’s a huge red flag

And the IRS does have guidance on what employees can do in that scenario which itself will start to raise flags for the IRS.

Misclassified workers can file Social Security tax form

Workers who believe they have been improperly classified as independent contractors by an employer can use Form 8919, Uncollected Social Security and Medicare Tax on Wages, to figure and report the employee’s share of uncollected Social Security and Medicare taxes due on their compensation.

None of this is legal advice, if this happened to you talk to an attorney because there are probably other state and federal considerations and they may be able to help remedy the problem