Apple may be cutting contractors in an effort to slash costs

AppleInsider · February 16, 2023 9:57PM

While Apple may have avoided the significant layoffs that have plagued other Big Tech companies like Amazon and Meta until now, it now seems that the company is quietly cutting ties with contractors.

Apple Park

Mass waves of layoffs have plagued tech giants over the last several months. Meta, the parent company of Facebook and Instagram, laid off 11,000 employees in November. Amazon laid off 5% of its workforce.

Now, it appears that Apple is making some cuts to its workforce, starting with its independently employed contractors.

Contractors are not technically Apple employees but often work alongside Apple employees on various projects. A typical work contract must be renewed every 12 to 15 months.

However, instead of waiting for contracts to expire, Apple is allegedly firing contractors outright, according to On The Money.

Apple does not disclose the number of contractors that it works with, but the number is likely in the thousands. According to On The Money, insiders claim that contractors say they're treated like second-class citizens. Independent Contractors do not have stock options or health insurance and generally do not work at Apple Park.

Apple has been praised for avoiding mass layoffs in recent times.

Apple CEO Tim Cook has gone on record recently stating that the Cupertino-based company is being very deliberate in its hiring, and only hiring in specific departments.

As a result, the tech giant has avoided the mass redundancies that many prominent technology firms have done.

Read on AppleInsider

mikethemartian · February 16, 2023 10:15PM

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

coolfactor · February 16, 2023 11:05PM

Contractors are their own company. Why would they expect perks from a client? Are they giving perks to the client?

Xed · February 16, 2023 11:39PM

coolfactor said:

Contractors are their own company. Why would they expect perks from a client? Are they giving perks to the client?

They can work for themselves or they can work for a company that is contracted with Apple, but let's say they are all independent 1099 employees. I've never once brought in donuts for my department and said that only W2 employees, that 1099 employees could partake. You have to be a real asshole to either do that or think that's appropriate for people all working on the same project or department.

dewme · February 16, 2023 11:48PM

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

jimh2 · February 17, 2023 1:07AM

The reason you have contractors is for special skills or to supplement existing employees. It gives you an easy way to quickly bring people in and purge without laying off any employees. It’s also a way to test drive roller without having to hire and fire if they do not work out. I have heard of companies using a contractor hiring them in exchange for a negotiated fee. All depends on the agreement.

mark fearing · February 17, 2023 1:41AM

OK...one of the main reasons company pick up contractors is simply because they don't register on taxes or head count as full employees and this is a monetary advantage and it keeps wall street happy as the headcount isn't growing. Most of the time, in my experience, contractors make up for corporate shortsightedness OR trying to increase productivity without having to add headcount of employees.

Jasong1101 · February 17, 2023 2:38AM

I literally brought this up in the article praising Tim Cook for not laying off. Apple has always used contract labor. They even give retail employees career experiences at corporate, with the carrot being dangled that they could move to Corp and better pay and life work balance. Apple gets to pay cheaper employee for 6-12 months and the employee goes back to retail without the Corp gig. I don’t think either one is a problem really if the company didn’t have so much cash like Apple does. Pay people more, hire more, make health insurance free, stop inflating your stock price by buying back stock. Apple is not perfect at all. They just sell a ton of products. The experience working there and shopping there has gone down every year Tim took over.

soumyasaha · February 17, 2023 2:47AM

Same story for almost all the big companies.

mikethemartian · February 17, 2023 4:34AM

dewme said:

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

In my engineering field you usually get about a 50% premium on hourly pay as a contractor vs the same job as a regular full time employee. So sometimes regular employees get upset by that but they don’t realize that it is in exchange for not getting benefits including paid sick days, holidays, vacation, etc. For someone like me who doesn’t take vacations or holidays off it pays off. My vacations are between contracts. So at some companies this bothers employers so they set up those rules. But there are other companies I have worked for that don’t act that way.

mjtomlin · February 17, 2023 7:17AM

So start with the headline... "Apple may be cutting contractors in an effort to slash costs"

Couldn't possibly be because a significant project is coming to an end?

Then later switch it up to... "Now, it appears that Apple is making some cuts to its workforce, starting with its independently employed contractors."

So Apple is letting go of some employees, but starting with contractors first?

Then again change to... "Apple is allegedly firing contractors outright,"

Project canceled, go home.

If you're going to speculate, cover all possibilities.

davidw · February 17, 2023 11:21AM

dewme said:

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

Maybe you'll understand more if you read up on the confusing ways government distinguish the difference between a contractor and an employee. It's not a solid distinct line and an employer can easily cross it, without knowing it. And what might be consider a classification as a contractor in one State, might not be in another State. If the employers starts treating their contractors like employees, then the government might deem them "employees" and the employer will have start paying them (and maybe with back pay) with all the benefits of being covered by FLSA. Employers are not suppose to hire contractors to replace employees or for tax advantages. If the government determines that those are the only benefits the employers sought, then the government will consider those contractors as employees and covered by FLSA.

https://webapps.dol.gov/elaws/whd/flsa/scope/er14.asp

https://www.ottingerlaw.com/california/independent-contractor-employee/#Which_Industries_Have_Been_Hardest_Hit_by_Independent_Contractor_Misclassification

And then the employer have to deal with the IRS definition of an employee vs an independent contractor. And thats not a solid distinct line either.

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

dewme · February 17, 2023 2:17PM

davidw said:

dewme said:

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

Maybe you'll understand more if you read up on the confusing ways government distinguish the difference between a contractor and an employee. It's not a solid distinct line and an employer can easily cross it, without knowing it. And what might be consider a classification as a contractor in one State, might not be in another State. If the employers starts treating their contractors like employees, then the government might deem them "employees" and the employer will have start paying them (and maybe with back pay) with all the benefits of being covered by FLSA. Employers are not suppose to hire contractors to replace employees or for tax advantages. If the government determines that those are the only benefits the employers sought, then the government will consider those contractors as employees and covered by FLSA.

https://webapps.dol.gov/elaws/whd/flsa/scope/er14.asp

https://www.ottingerlaw.com/california/independent-contractor-employee/#Which_Industries_Have_Been_Hardest_Hit_by_Independent_Contractor_Misclassification

And then the employer have to deal with the IRS definition of an employee vs an independent contractor. And thats not a solid distinct line either.

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

We’re talking about donuts.

Employee receive all kinds of payments-in-kind from their employers, which HR will account for if you ask. An employee’s total compensation is more than their salary because of things like the company co-paying for certain benefits, bonuses, 401K matching, etc. Incidentally, these benefits offset some of the base rate premium that contractors receive versus employees.

But I’m sure if you go to HR and ask them where they’ve accounted for the “bonus donuts” in your total compensation package you’ll get some interesting looks. Last time I checked the feds didn’t have a donut enforcement unit but maybe it’s part of another agency, like the ATF+D.

I’ve worked with and hired contractors on both government and non-government projects. Some of these DOD projects had at least 30% contractors, possibly more. I also have a friend who worked as a contractor for Microsoft and was later hired as a full time employee. I’m certain he wouldn’t have made the transition if they embarrassed him by publicly denying him the little niceties and petty perks like free drinks that Microsoft provides to its employees and guests.

When it comes to my experience with donuts, bagels, Kringle, etc., of which I consider myself somewhat of a subject matter expert, I’d say that in about 90% of the cases the sweet treats were provided by an individual out of their own pocket or through informal practices baked into the company’s culture, like bringing in donuts on your birthday or the boss or team leader giving a “thank you” to the team at significant milestones. I know that the corporate workplace has become much more stoic, cold, and uncaring over the last couple of decades, but those little informal yet semi structured traditions/ceremonies like bringing in treats to share with the team at the end of a team achievement or on someone’s birthday helped bring everyone on the team a little closer together, contractors included, because they are still part of the team.

foregoneconclusion · February 17, 2023 3:05PM

I wouldn't get too worked up about contractors not getting donuts. I've worked at companies where they would cater breakfast/lunch for large corporate management meetings and that food was off limits to rank and file employees. Free food for corporate management would be fairly elaborate. Free food for rank and file was typically pizza.

larryjw · February 17, 2023 3:44PM

“Independent contractor” is supposed to be someone who is not managed by the company. They are supposed to be “independent”. In theory, at least, such contractors are working on short term basis, on well defined and limited projects. It does make sense to cut the cost of nonessential projects when reviewing budgets.

We should also expect those companies laying off their employees to also be axing their independent contractors, and factoring those numbers into their counts.

davidw · February 17, 2023 5:10PM

dewme said:

davidw said:

dewme said:

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

Maybe you'll understand more if you read up on the confusing ways government distinguish the difference between a contractor and an employee. It's not a solid distinct line and an employer can easily cross it, without knowing it. And what might be consider a classification as a contractor in one State, might not be in another State. If the employers starts treating their contractors like employees, then the government might deem them "employees" and the employer will have start paying them (and maybe with back pay) with all the benefits of being covered by FLSA. Employers are not suppose to hire contractors to replace employees or for tax advantages. If the government determines that those are the only benefits the employers sought, then the government will consider those contractors as employees and covered by FLSA.

https://webapps.dol.gov/elaws/whd/flsa/scope/er14.asp

https://www.ottingerlaw.com/california/independent-contractor-employee/#Which_Industries_Have_Been_Hardest_Hit_by_Independent_Contractor_Misclassification

And then the employer have to deal with the IRS definition of an employee vs an independent contractor. And thats not a solid distinct line either.

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

We’re talking about donuts.

Employee receive all kinds of payments-in-kind from their employers, which HR will account for if you ask. An employee’s total compensation is more than their salary because of things like the company co-paying for certain benefits, bonuses, 401K matching, etc. Incidentally, these benefits offset some of the base rate premium that contractors receive versus employees.

But I’m sure if you go to HR and ask them where they’ve accounted for the “bonus donuts” in your total compensation package you’ll get some interesting looks. Last time I checked the feds didn’t have a donut enforcement unit but maybe it’s part of another agency, like the ATF+D.

I’ve worked with and hired contractors on both government and non-government projects. Some of these DOD projects had at least 30% contractors, possibly more. I also have a friend who worked as a contractor for Microsoft and was later hired as a full time employee. I’m certain he wouldn’t have made the transition if they embarrassed him by publicly denying him the little niceties and petty perks like free drinks that Microsoft provides to its employees and guests.

When it comes to my experience with donuts, bagels, Kringle, etc., of which I consider myself somewhat of a subject matter expert, I’d say that in about 90% of the cases the sweet treats were provided by an individual out of their own pocket or through informal practices baked into the company’s culture, like bringing in donuts on your birthday or the boss or team leader giving a “thank you” to the team at significant milestones. I know that the corporate workplace has become much more stoic, cold, and uncaring over the last couple of decades, but those little informal yet semi structured traditions/ceremonies like bringing in treats to share with the team at the end of a team achievement or on someone’s birthday helped bring everyone on the team a little closer together, contractors included, because they are still part of the team.

If an employee pays and bring in the donuts, that shouldn't be a problem if they were to offer them to their fellow co workers that are contract workers. The problem might be when the employer buys donuts for their employees, say once a week. Independent contractors are suppose to be their own business. Say a project the contractor is working on requires special safety goggles that the employer hands out to employees for free, the contractor is suppose to pay for those goggles and then bill the employer. Or the agency the contractor works for, must buy the googles for their contract workers and then they bill the employer. That's the relationship between a contractor and employer. And most contractor workers knows this. Unless it's in their contract that they can partake in the employers free snacks, they are not suppose to eat free food that are meant for employees. And the IRS only allows a tax deduction for the free snacks that is offered to employees.

https://www.mossadams.com/articles/2019/april/deduction-for-employer-provided-meals ;

If an employer have a policy to go out and buy several boxes of donuts for all their employees, whenever one of them have a birthday, they probably are allowed a tax deduction for that. But if one day while buying donuts because it's one of their employees birthday, the employer decided to buy an extra box of donuts for the contractors hired to paint some of the offices, then that box of donuts might not be tax deductible. Depending on how the IRS define "employees".

It's probably not a big deal, if contractors are allowed to partake in the free donuts the employer buys for their employees once a week, if there's only handful of contract workers. But with some of these tech companies that might have thousands of workers, with maybe a third of them being independent contractors, those free donuts adds up.

Madbum · February 17, 2023 8:14PM

I really want to see Apple trim the fat in the Retail stores.

way too may stores and useless people working in them

StrangeDays · February 18, 2023 4:09PM

davidw said:

dewme said:

mikethemartian said:

I worked a contract position for one engineering company that made a point of telling all of us contractors that when they brought in free doughnuts for the employees on Friday mornings that they were only for regular employees and not contractors. It was funny. One of the guys I worked with told me a story that he worked for a large engineering company that had an employee Thanksgiving holiday meal where they told the contractors they weren’t invited, which I found hilarious given the meaning of Thanksgiving.

That's a total douche bag move. Perks like project completion bonuses, use of the company's loge for a sporting event or concert, company sponsored educational seminars, etc., yeah, I can understand excluding contractors. But donuts and a holiday meal? Give me a break. Total dirt bag level pettiness. Contractors are still contributing team members and deserve to be treated with the same dignity, respect, and professionalism as your company colleagues. Some contractors go on to become full time employees. Treating them like dirt as contractors isn't going to ingratiate them your company's culture. The upside is that if you are a exposed to this kind of pettiness as a contractor you'll get to move on to your next contract and leave those douche bags in your rear view mirror.

Maybe you'll understand more if you read up on the confusing ways government distinguish the difference between a contractor and an employee. It's not a solid distinct line and an employer can easily cross it, without knowing it. And what might be consider a classification as a contractor in one State, might not be in another State. If the employers starts treating their contractors like employees, then the government might deem them "employees" and the employer will have start paying them (and maybe with back pay) with all the benefits of being covered by FLSA. Employers are not suppose to hire contractors to replace employees or for tax advantages. If the government determines that those are the only benefits the employers sought, then the government will consider those contractors as employees and covered by FLSA.

https://webapps.dol.gov/elaws/whd/flsa/scope/er14.asp

https://www.ottingerlaw.com/california/independent-contractor-employee/#Which_Industries_Have_Been_Hardest_Hit_by_Independent_Contractor_Misclassification

And then the employer have to deal with the IRS definition of an employee vs an independent contractor. And thats not a solid distinct line either.

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

Very familiar with all of that as I was a software engineer contractor for a decade at various Fortune 100s across the country. I’ve even been through the process of retro reclassification from 1099 to W2. None of the employers drew the line at donuts, potlucks, or even project meals. It’s fine.

Anyone choosing to go to that extreme just doesn’t understand the IRS control test very well, which is based around the question of behavior control. Not donuts or potlucks or pizza.

StrangeDays · February 18, 2023 4:12PM

Madbum said:

I really want to see Apple trim the fat in the Retail stores.

way too may stores and useless people working in them

Uninformed opinion.

jimh2 · February 19, 2023 3:56PM

I suspect that Apple is using contractors that are supplied by another company versus handling it directly. This avoids all IRS classification issues as the contractor works for another company who handles payments and may provide liability, workers compensation and other protections. Easy way to staff up and down without changing employee counts.

Apple may be cutting contractors in an effort to slash costs

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