What’s the difference between 1099 workers and W-2 employees? I get this question a lot. Especially now that we live in a world where working remotely has become the new norm. Here are some general guidelines to make sure you're classifying your workers correctly: 𝟏𝟎𝟗𝟗 𝐰𝐨𝐫𝐤𝐞𝐫𝐬 𝐚𝐫𝐞: - Hired via bid or written contract to complete a specific project, and can be hired by other companies while they work for you - Self-employed and use their own equipment to complete work - Free to hire whomever they want or need to help - Financially invested in the project and stand to incur significant profit or loss based on its outcome - Engaged for a specific period of time and paid on a per-project basis 𝗪-𝟐 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞𝐬 𝐭𝐲𝐩𝐢𝐜𝐚𝐥𝐥𝐲 𝐚𝐫𝐞: - Hired after filling out job applications and going through a traditional interviewing process - Employed by you, and use your tools and equipment to complete their work - Not free to hire others to assist them with their job - Reimbursed for any business expenses they incur related to projects or their work - Guaranteed and paid a regular wage — or commission — on an hourly, weekly or other ongoing, semi-regular basis Misclassified workers could land you in violation of labor laws and subject to noncompliance fines or litigation, in addition to IRS penalties. Please reach out if you have any questions, or need clarity!
Proper classification is crucial to avoid legal issues and IRS penalties, so thank you for this wonderful clarification!
Hopefully companies start to realize that remote is not the same as being in person. It’s no longer the same level of service when you call places.
Oh boy misclassification is such a big issue and one that a lot of business owners have problems with. Great information.
This is very good information. I will be honest that I did not know these differences.
Knowing this difference is crucial! Confusion on this is definitely affecting the mental health field as well.
Well said!
We create workplaces that makes waves of happiness in our society by guiding executives on how to reduce friction by hiring and firing strategically.
1ySay it louder for those in the back! Too many people think they can CHOOSE whether they are 1099 or W-2. It is not a choice, the DOL governs this.