1099 vs Employee: You Need to Know the Difference

By Gina Beckman, 10 til 2 Marketing Director

Recently, this question appeared on LinkedIn:
What’s the benefit of hiring a W2 versus hiring a 1099 consultant for the same job? I’m interested in your opinion when comparing a W2 to a 1099 hire. Thanks.

This is the answer that was given:
I can’t think of a reason to put someone on W2 instead of a 1099. If the need is for a permanent, full time position, then W2 is generally the way to go. If the work doesn’t fit this category, I can’t think of a reason to use a W2 employee.

Well, they kind of got it right.
It seems there is a trend to move more and more work to Independent Contractors rather than hire employees directly onto payroll. The answer above is missing a few very critical points, particularly what is the legal definition of a contractor; and can my job be filled by a 1099 worker or must I use a W2 employee?

The answer here is as simple as two little words. A Duck. If it walks like a duck and quacks like a duck, it’s a duck. In other words, if the position requires the employee to be directed as to how, when, where and with what to do the job, then get quacking… he is a W2 employee. If however, the job will be done independently, then a 1099 may be the way to go.

Think of a roofer. If you call someone to fix your roof you don’t tell them what size nails to use, how to swing the hammer, which guys will work and when lunch break is. That is because they are independent (AKA 1099) contractors. Now if you have an administrative assistant who is required to be at the office at 9am, dress according to code, take lunch at noon, use Microsoft Word on an office computer and report to a supervisor, that’s a W2 employee.

This is serious stuff.

Employee misclassification is something that the Feds aren’t messing with. From large businesses to mom-and-pop shops, the fines are everywhere and they’re not cheap. Take a look:

  • After five years of litigation, The Orange County Register in California agreed to pay $22 million to settle a suit involving the misclassification of workers as independent contractors.
  • The Department of Labor ordered three construction companies to pay $491,100 in back wages and damages to 99 employees who were misclassified as independent contractors, in addition to another $108,900 in civil fines.
  • A prominent shipping company settled a series of class action lawsuits alleging worker misclassification to the tune of $27 million. Previously, the IRS had already ordered the company to pay $319 million in back taxes and penalties.

Estimates are that 20% of businesses misclassify workers; so make sure your business isn’t included in this nasty statistic. Click here to read “Independent Contractor (Self-Employed) or Employee?” on the IRS website; and don’t forget that to be safe on the 1099 issue, you can always use a 10 til 2 employee.

ALSO TRENDING ON 10 til 2:

 

How do you look on paper? A new job search warrants a new resume. Click here to learn more about 10 til 2′ s Timeless Resume Service.

173 Responses to “1099 vs Employee: You Need to Know the Difference”

  1. John Flurkey says:

    Most recently I have been working as a temporary employee and often called a contractor but always as a W2 employee. But the day before I am to start I discover that I am being employed as 1099. The comment, “Now if you have an administrative assistant who is required to be at the office at 9am, dress according to code, take lunch at noon, use Microsoft Word on an office computer and report to a supervisor, that’s a W2 employee.” would suggest that I am being misclassified for whatever reason by this consulting firm since my situation is very similar.

    This could be a deal breaker since I have no desire to be an independent contractor and would even take less money if that why. I am not happy with the start time and have no experience with this type of situation but with this latest development I may not start tomorrow since it seems like I was duped.

    • 10 til 2 says:

      John:

      You should definitely look into this, but please don’t assume that you are being “duped.” There may be a simple and honest explanation as to why they are classifying you as a 1099. Even if they are doing it in error (and we are not implying that they are), it may just be because of a lack of understanding of employment law on their part. That was actually the reason we wrote this blog post; there is a ton of misinformation and assumptions made in regard to contract employment.

      Good luck… we would love to know how this turned out for you!

      • Dora Madero says:

        I work for a small company and I am a Office Administrator . They don’t take taxes out so I have to do a 1099 , is this ok . Please let me know Thanks

        • 10 til 2 says:

          Dora:
          If the company is mandating as to when and how you do your job, asks you to abide by a certain dress code, tells you when to take your breaks, etc., then all signs point to you being an employee rather than a 1099 contractor. The whole point here is that designating between a 1099 contractor and an employee is not an arbitrary call; there are requirements that distinguish the two. However, as we have stated throughout this thread, we are not employment attorneys and suggest if you have further questions you speak with one or your local department of labor.

  2. terry schoen says:

    my daughter is classified as a 1099 worker and paid 100% commission yet they control her…they tell her when to be at work…monitor her meetings with customers…report to a supervisor…submit weekly reports…tell her when she has to work…use office equipment…has an office there, etc. this is a medium company with 3 owners who are all attorneys. this seems to be a flagrant violation…true?

  3. Boss says:

    Here’s the dirt…. If you have a worker and that worker only works for you at your premises 100% of the time and uses all your equipment and you dictate how he does the work in the office he is considered a Employee and must receive a W-2.

    If that workers works for you more than occassionaly and also works for other companies and you don’t dictate when he comes and goes he is can receive a 1099. That is the condensed version.

  4. Paul says:

    My wife is a therapist, who has worked seven years at her practice. For those seven years she was salaried W-2 employee. She had to show up at a certain time, report to a supervisor, submit reports, etc. Now her boss switched her to a 1099 form with all those requirements still in tact. Is it true that this seems like a flagrant violation?

  5. cathy mac says:

    Talk to an accountant. Mine told me as 1099, I cannot deduct expenses if I am working the majority of time on their premises. Frankly, it’s easier on the employee to be W-2 because they figure all the accounting, etc. However, if you work as W-2 out of your home, make sure they pay you enough – or in addition to – your work expenses; i.e., copy paper, computer ink, etc.

  6. Jennifer says:

    I am in this very same siuation. I started a job as a graphic designer, working on various projects for them from product to print design and everything in between. In order to get this job I had to use/bring my own laptop every day while everyone else had a desktop. Came in the same time every morning as everyone else and left 8 hours later just as everyone else. Been working there for months (even got a raise) and just recently my boss called me a “Temp” (which surprised me). I started out working 3/4 days a week, but with more project demands I now work 40 hours a week. I recieved a 1099 form recently. Am I being duped?

  7. shea says:

    LAWLD i think the article is focusing on employers taking advantage of employees that don’t know any better. Where i live around austin small businesses just give 1099′s so they the employers dont have to do their own independent contractor forms. Young people don’t get taxes and don’t care to. Got better girls to do. Peace IRS and crooked Rich folk. open your wallet once and a while and the world would be better off!

  8. Kim says:

    I am interviewing tomorrow for a contract position as an Executive Assistant. I will be working from home. I have never been in a contract position. Can anyone tell me what I need to do in regards to taxes? I’m in California.

  9. Tabatha says:

    I am a CNA for a lady that is in a wheelchair I work for her part-time she always pays me with a personal check and I received a W-2 from her it says that she is not talking Federal Income tax out on me and she listed me as a Statuary Employee and she is taking Medicare and Social Security. I had no idea she wasn’t talking federal out on me and she said she considers me a 1099. What should I do ?

  10. Kim says:

    My husband is a self employed plumber and does a lot of work for 2 contracters who file a 1099 at the end of the year. We have recently hired our son to work with him as well. How do I go about making and filing a 1099 for my son at the end of the year?

  11. Matt says:

    I left my previous employer after 16 months in July of last year. I was a full time, W2 employee for the first year. Now, my old boss is telling me I need to wait to file until his accountant finishes my 1099. I have already received my 2012 W2 from this employer and have never filed a W9 as a contractor. Why would I possibly need a 1099?? Help!

    • James says:

      Kelly – my daughter is in the same boat. My accountant and tax man said this is against the law. He suggest that I contact the Texas Workforce Commission office here in our home town.

  12. Terri says:

    My daughter went to work for a very small company that was just starting out, she was laid off because the item didn’t sell well. She was paid for her hourly work, however they never took out any taxes or SS, etc. They issued a 1099 for her taxes. She then went to work as a child care provider for two children, and paid and hourly salary, however they issued her a 1099. She is not an independent contractor, she is a student, trying to work while finishing up school. Now she has to come up with at minimum $1,500 for taxes and an additional $600 for SS taxes and made less then $15,000.00 in the year. if she was issued a W2 she would only have to pay $525. What should she do now? Please help.

    • Debby says:

      Terri,
      Have your daughter file an SS8 directly with the IRS. They will determine whether or not she was an employee or self employed independant contractor. It’s illegal and the IRS is really cracking down on these people with stiff fines and penalties.

  13. Gerald DiPasquale says:

    I took a job as an Airboat Captain with a competitor down the road. I have been doing this for 9 years and have always been paid via W-2 and had workers comp – unemployment etc.

    When I first started I was told he needed to pay me with out any taxes taken out until he could find a payroll co. and get all required insurances. Hmm OK.

    A few months and three more employees later we’re told that NO ONE will give him a workers comp policy and we’re gong to have to be paid via 1099! Hmm well I have no choice considering I already quit my other job and the market isn’t exactly booming! OK!

    I leave and get my old job back in December. I get my 1099 in the mail Jan 2013 and go to local Tax place. I’m asked about my job as a sub-contactor, duties, work, hour, wages. “Well then you’re an employee”

    Apparently my old boss doesn’t know the law

  14. Kelly says:

    My daughter works at a hair salon. During part of 2012, she was considered an employee and taxes were withheld. Mid-year, the company decided to have all employees become self employeed. She only recieved a 1099 even though taxes were taken out during some of the calendar year. The company now wants to write her a check for the taxes that were withheld. Should I require both a W2 and a 1099? Or is it ok for the employee to write her a check for all the withholdings?

  15. Brooke says:

    Help- Background story: I started my job in Dec 2011, I thought I would be there temporarily (as did my employer to be) so I came on as a 1099. Turns out I am still working there- 15 months! I am undoubtedly a de facto W-2 worker and meet all the IRS reqs but still got a 1099 from employer. I paid estimated self-employment taxes during the year. Doing my taxes, I see I still owe additional s/e tax. But… if I had been a W-2, Id be getting a refund instead. I plan to contact the IRS to dispute my 1099 status and claim that I was a de-facto W-2. I am quitting this job anyway next month, so burning bridges isnt a big deal.

    THE QUESTION IS: what do I do until the IRS makes a determination? Complete my taxes as if I am a 1099 and hope to get a refund later on? Is it MY responsibility to have asked to be W-2d? or my boss should have know better…all advice appreciated

  16. Pat says:

    I’m moving to a new position where I will work in an office 2 days a week 8 hrs a day. I’ll be working my own hours, not those of others doing my type work. The company will provide my office supplies, my work station, etc. I won’t be forced to take a lunch hour. Have always been a W2 employee and am concerned about what financial pitfalls and tax implications this will have. I start next Monday and have to make a quick decision.

  17. Scott says:

    I have been working for a carpet cleanking company that provides me “jobs”. I am told to be at work at 7:00 A.M. then given “jobs” to complete in my own purchased company uniform. I can habe 3-4 of these a day. My job is to upsell the customer. I drive company van (which one had front bumper damage to it, for which they took $1900.00 out of my check that I was made to pay for pay for) they refused to turn it into the insurance company. I provide daily reports of all payments recieved, along with the van.
    I report to the office on their schedule, wear their uniform, drive their van, purchase their chemicals,(or I would not be covered under the $15.00 damage waiver I pay weekly)
    If I am told to do certain things their way am I a 1099 or a W2?

  18. Richard says:

    I just hired someone as a 1099 worker (she wanted to be classified this way, we don’t care if she’s 1099 or W2)who is doing accounting work for us on an ongoing weekly basis who comes and goes as she pleases, but does do her work in our offices. We will tell her what we need to have done on an ongoing basis, but its up to her to get it done. We will not be directing her as to how and when to get this work done. She also works at another company doing accounting, works some as a nanny and is also a real estate agent part time. Given all the hats she wears would it seem reasonable that this person be classified as 1099? Does the mere fact that she will be doing the work in our office make her ineligible for 1099 status?

  19. Jonathan says:

    Richard,

    Your new accounting hire prefers being a 1099 most likely for tax reasons. Also, this gives her the flexibility to work on mutiple contracts, and she is eligible to obtain women owned business status. Most employers frown upon moonlighting, so that is probably why she prefers that title. It is especially appropriate if she is working less than 40 hours a week for your group. It makes no difference if she does the work in your office or someplace else, unless you had her sign some type of workspace agreement.

    Thanks,

    Jonathan

  20. Robert says:

    I don’t want to lose my job, but I am considered a contract worker, but for the last two years have known that I should be an employee. Is there a way to report this without getting into trouble and losing my job.

  21. I worked for a company for over two years fixing their rental properties. I worked with another group of guys they hired. We used a combo of ours and their tools but always worked m-f 9-4 with and hour taken out for a lunch we never took. We were directed what to do and were supplied the materials. We were paid every Friday at their shop. I assumed they were handling their taxes and insurance they were liable for on their end. But, low and behold, we were laid off one by one and now they are saying we were sub contractors so we are outta luck on the unemployment? That’s REAL sleezey in my book! But is it legal?

  22. Brad says:

    My son received a W-2 from his employer in 2012 for his salary but received a 1099 for an end of year bonus. Is this 1099 appropriate?

  23. katc says:

    I have worked for the same company for almost 2years, I have been fired, rehired, given my own program, now that the business is growing I was told that I can not own my own logs they have to belong to him. However now multiple people have access to them. he pays for the lead generation, and i have to work 9-9 and i have to submit a schedule, when i’m not working someone else gets to “handle” my logs, am i wrong to think I am not an independant contractor since i no longer have control of my work.

  24. WIll says:

    I was a independent 1099 contractor at farmers and they put me back on W2 without my knowledge is that against the law. I signed a 1099 contract then they switch me back to a W2 worker, would love any feedback. my email is willpetaluma707@yahoo.com

  25. LF says:

    I was hired on as a w2. I can technically make my own hours, as I am the office admin and I am in charge of scheduling. However, I also have to answer to the bosses, use their equipment and be at their beck-and-call. We have a very relaxed dress-code, but a dress-code nonetheless. However, I’ve never had a lunch break time and always work straight through it. They want to switch me over to a 1099 because I make the schedule and I don’t take lunch breaks. I don’t know if I am a 1099 qualified or not. opinions?

    • 10 til 2 says:

      We are not employment attorneys, however it sounds like you are most likely a W2 employee because you are directed on how and when to do your job. Also, as a W2 employee, federal law requires that you be given an unpaid 30 minute lunch break if you are working more than five hours at a time. You may be due other breaks as well. This reply is based on our interpretation of Colorado employment laws; laws may vary from state to state. Good luck, LF.

  26. G.Ahlers says:

    I have been told I am a contract employee. However, they have deducted taxes and social security, medicare from my check. It seems a little strange but they told me I do not qualify for insurance or any other benefits. I am 55 and I think they are not filing my taxes they withdrew from my check. Can they also deny me insurance benefits that all the other employees receive?
    Thank You.

    • 10 til 2 says:

      G. Ahlers:

      Hmmm. From our perspective it doesn’t sound right. If you are a contract (1099) employee, they probably should not be taking out social security, taxes or medicare. Like we stated, we are not employment attorneys, but it sounds like it is worth you looking into further.

      There has been high-profile legal precedent on the subject of contract workers. Microsoft lost a huge lawsuit pertaining to misclassification of contract employees. While they were not deducting for ss, taxes and the like, they made contract workers do the same work as employees, but without any of the benefits. Here is a great article from Reuters on the subject: http://www.reuters.com/article/2009/04/01/businesspropicks-us-findlaw-dont-treat-c-idUSTRE53063S20090401.

      You would probably be well served to contact someone at your state’s Department of Labor to discuss this.

      Good luck G. and keep us posted!

  27. Tara b says:

    I work for a construction company for sales going door o door and I have a “boss” who tells me when I can and can’t work and what times and dress and what I can or can’t do.. I am considered a independent contractor with a 1099 is that against the law? What am I suppose to do?

  28. jo says:

    I recently rented a larger location for my clothing business which I do all the work at. I have been taking in alterations work I pin the item and write a ticket on it. I have been taking to a ladies house drop it off she charges me a flat fee and I pick it up when complete take to the store, customer picks up item and I charge my own fee for the items work.
    So far she has been a 1099. Now with the larger location she wants to set up work area in my shop with her equipment, have a key to the store, come and go as she wants, I still pin and take in the items, put them on a rack in the back she comes in and works on what & when she wants and puts on the pickup rack out front with her bill to me. I still pay her a flat fee for the work and then charge my customer my price.
    1. Is she employee or 1099
    2. If she brings in other stuff from outside customers and doesn’t pay me fee is she 1099?
    3.if there is a contract where she pays me for floor space for her equipment, comes and works at her own when she wants is she 1099?

    • 10 til 2 says:

      The bottom line is, you are paying for her services, but not telling her how, where and when to do her job… so she most definitely sounds like a 1099 or maybe even simply a vendor.

  29. Gabby says:

    I am a clinical research associate and work for a large company as a w2 employee. They are now wanting me to change to a contract (1099) employee so they don’t have to pay CA taxes on me, yet still do my job exactly the same way. Is that legal and what do I do?

    • 10 til 2 says:

      Gabby:

      It really depends upon the parameters of your job and how much your employer oversees when and how you do it. But it doesn’t sound right to us. Although we are not attorneys (so are not in a position to give legal advice) we suggest you contact your state’s Department of Labor.

  30. Gigi says:

    I work for a small doctors office with one doctor and I am the only full time employee, classified as a full time employee and get a W2. We have another part time employee that does our billing in our office and works 15 hrs a week. My boss doesn’t want to pay taxes on her so he says she is contract labor, but she has to clock in and out, be at work at a center time, dress accordingly, etc. I think this is wrong and unethical. Am i wrong?

  31. Kris says:

    I have been working at my job as a floor cleaning specialist for 1 1/2 years now. I am a 1099. The thing is i am told what time i need to be in what jobs i am doing i drive my bosses company truck with equipment he pays gas and toll money. I get paid be the job i drive up to 7 hours of drive time each night to get these jobs done and i DO NOT get paid for drive time or mileage. I feel that something is wrong here and i feel like my boss owes me for all this driving i have done. SOMEONE PLEASE LET ME KNOW WHAT IS UP HERE!!

  32. Kris says:

    My work days also tend to be atleast 12 hour days up to 16 hours. This is the time i leave the shop till the time i arrive back to the shop. I work 5 days a week. Im putting in long days

  33. Sarah says:

    I recently took an accounting job for an auto company fixing there books. I come and go as I please, work on whatever I think needs to be done next and bring all my own equipment and office supplies. Can I claim my mileage? Also I noticed that the 2 members of the LLC are writing their checks to their wife or girlfriend. Do the wife and girlfriend need to receive a 1099? They have jobs, the members can’t get bank accounts since they owe personal back taxes. The wife and girlfriend do not work there. how do I show Distribution when the members have no checks written to them?

    • 10 til 2 says:

      Please don’t take offense, but it appears that you have more to worry about than your mileage (which by the way you should likely be able to claim as a 1099 contractor). The fact that the company might be making you complicit in tax fraud should be far more concerning.

  34. john B says:

    Hello all,

    I work for a roofing company in Maryland and I am 1099. My boss tells me what to do and makes it mandatory that I work 6 days a week and I am not allowed to take off on Saturday’s at all! They control where I go everyday and I must come to the office daily. They provide no benefits and they complain if I want to take off 1 week a year for vacation. Is this normal or should I do something about this?

    • 10 til 2 says:

      John:

      As we have mentioned several times, we are not employment attorneys, so it is best to speak with one or your state’s Department of Labor. However, at face value, it sounds like you are an employee rather than a 1099. A roofing company itself can be an independent contractor while still having its workers be employees. By classifying (or sometimes misclassifying) workers as 1099s, roofing and similar companies avoid paying massive amounts for things like Workmen’s Comp and unemployment insurance. It is definitely worth looking into. Here is a link to a great article that you should consider reading: http://www.roofingcontractor.com/articles/employee-or-independent-contractor-a-critical-distinction. Good luck and keep us posted.

  35. Lana K. says:

    My former employer misclassified me as an independent contractor. This determination was made by EDD after I applied for unemployment benefits. After it happened, The company I use to work for employer was forced to pay ALL missing payroll taxes (MediCare, Social Security and SDI) for the entire period of time my misclassification. I have never received any letters regarding this matter neither from EDD nor from IRS. Now this company is contacting me and asking to pay my portion of these taxes back to them within 90 days. They also have sent me amended W-2 forms (instead 1099 I was using to pay my taxes in the past). Am I responsible for ANY payments in this case? Thank you for helping me to resolve this problem!

    • 10 til 2 says:

      Lana. You need to contact the Department of Labor in your state. Your former employers is lucky they are not being slapped with a large fine (or maybe they are).

  36. Lana K. says:

    Thank you!

  37. Anthony texas254 says:

    Me and cousin is working for a company that from Brownsville , while that have us as 1099 they tell us when be at work , break , leave ,what to do and how to do it we get paid by the hour and my cousin was hurt on the job the other day . Cant work and needs surgery on his leg . Need help any info ……

    • 10 til 2 says:

      In our opinion, it sounds like both of you may have been misclassified and because of this, neither of you are likely covered by worker’s comp insurance. There is an easy way to help determine what type of worker someone is: If a worker is supplying the fundamental service that a company provides, they are more than likely a W2 employee. For instance, if you are a roofer working for a roofing company, you are likely a W2 and not a 1099; but if you are a plumber working for a marketing company, you are likely a 1099. As we have mentioned many times, we are not employment attorneys, so we suggest you and your cousin speak to one in your area. Good luck and keep us posted.

  38. Greg says:

    Ok my question is if I filed a 1099 a couple years back and now the IRS is saying that the employer claims I made an additional $20,000 and is asking for more money … the problem is, I really was not a 1099 independent contractor but instead an actually employee will I get in trouble if I tell the IRS that this was misclassified for not claiming it back in 2011? do they see it as I assume some responsibility seeing as I filed a tax return as 1099? The fact is I needed a job at the time and I was willing to make exceptions I normally wouldn’t but now to pay an additional 6000 dollars in taxes seems a little ridiculous. the additional income they’re claiming is not accurate to begin with but secondly I’m kind of uncomfortable being a snitch… any advice? Do i just dispute the addition income they are claiming I received and keep my mouth shut about being an employee? Or do I blow the whistle and dispute it?

    • 10 til 2 says:

      Greg… this is definitely one for an attorney who specializes in employment law. We don’t know how much you should worry about being a snitch; the entire point of this blog post is that employers need to understand that misclassification of workers can be a massive liability to their businesses… and they should know better. Good luck.

  39. Phil L says:

    My previous employer is going out of business, and hired a going out of business company to come in and do a big promotion for a few months as a last hoorah! He no longer pays us, the new company does. It’s a straight commission job, and they make us be 1099 contractors. They take out state taxes, claiming it allows us to claim unemployment when their gig is done. They originally told us when they came in that we could work as much or as little as we wanted. Then they flooded the floor (doubled the sales staff), so no one is making money. They make us come in on a schedule, have a dress code, and tell us how we are to interact with the customers. Are we 1099 contractors, or are we supposed to be employees. I am convinced they do this to not have to pay the extra taxes they would as an employer. Also, do you have any idea as to the requirements of me working for them, making less than minimum wage, vs going on unemployment and making $405 a week here in NY

    • 10 til 2 says:

      Phil… it sounds like you should be a W2, but as you know, we are not employment attorneys, so it is best to contact the Department of Labor for better evaluation of the situation.

  40. Naomi f says:

    I am looking to have someone help me out like 4 hours a week a couple times a month. Max 16 hours a month. Do I need to put them on as a w-2 employee or as a 1099 ?

  41. Rick H says:

    im a Truck driver pulling loads booked by an office worker. the company tells me when to leave and where to do all my pick ups and deliverys. the only thing i do is the route and loading n unloading along with mis paper work. they have us on 1099 where do i fit in on this. there truck there customers there phone. i pay for nothing out of my pocket

  42. Deanna says:

    I’ve recently started working with a small marketing company. They have put me down as a 1099 and consider me my own self contractor. As my first job and having no knowledge of tax returns how should i go about this? Is there any way i can file myself under a W-2 or how do i go about doing the 1099 and not having to owe incredibly ridiculously large amounts of money at the end of the year? Is the 1099 even worth the job (difficulty of keeping track)? And/or how can you write-off? The manager said that i can “write-off” as in like keeping track of all business related expenses.

    • 10 til 2 says:

      At the end of the calendar year, companies send their contract workers a 1099 form, which includes the amount the contractor has been paid for the year. This is the documentation you use on your tax returns. Many contractors put aside a portion of each check they receive into a separate account to cover taxes at the end of the year. As a contractor, you are able to write off certain expenses; check the IRS website to determine exactly which ones. Again, we are not employment attorneys; you may want to contact the Department of Labor, as they can likely best answer your questions.

  43. justin says:

    i’ve been working construction for the same boss for about five years now. when I started he told me I was a sub-contractor. I never signed an agreement. I’ve never had my own liablaty or insurance, he supplys the tools and tells me when to start and leave. I’ve been getting 1099′s every year since i’ve started… i’ve never paid in to the irs so of coarse they are coming after me for back taxes should I make them aware of the situation?

    • 10 til 2 says:

      Just because a company is a subcontractor does not mean that their employees are; either way you need to pay taxes on the money you earn. It would be wise to speak to your Department of Labor or an employment attorney regarding your specific situation.

  44. Brian says:

    My wife is being hired by my employer to do some IT work for a day or two a week while we put our 2 year old in part time daycare for socialization. The IT head is wanting to set her up as a 1099 contractor rather than a W-2 part-timer.

    What are some advantages/disadvantages to this scenerio? As a 1099, what do we need to do to minimize our tax liability and stay in compliance with the law?

    Is childcare a deductible business expense for a contractor?

  45. David Miller says:

    Great thread. Very interesting.

    I am a financial advisor for a firm in NJ. I am paid 100% on commission, but am a W-2 employee who is required to adhere to a specific schedule and dress, etc. Is it legal to have a W-2 employee be paid entirely on commission?

    • 10 til 2 says:

      As we have mentioned, we are not employment attorneys, so for a definitive answer to your question, you may want to consult with one or contact your local Department of Labor. That being said, we believe that as long as your commission averages out to at least minimum wage, employers can pay 100% commission. Not going to swear on it though. :)

  46. David Miller says:

    Ok….Thanks for the input. How about this one: Can a W-2 employee be charged a monthly fee for “rent” of his office space? I was under the impression that those rental fees were reserved for 1099 workers only….

  47. Russ says:

    I just learned the hard way there is another reason to go W-2. Limitations on garnishment for a non-tax Fed debt. I was disabled following a car accident and unable to work for over a decade. Interest, penalties, etc raised student loan debts to over $150K. I finally was able to gradually begin working, and perform paralegal service. Over 4 months, I only earned $5,400 but well on my way to becoming self sufficient again. Pay is through Fed Court system – 100% of earnings was attached as “vendor” payment versus 15% limit if deemed wages.

  48. Marshall says:

    I have worked long hours for a lawn care company for two years. I recently became a “crew” leader and received a raise. He then informed me I we were all to lose overtime. I Am classified as an independent contractor for taxes yet I wear his uniform, have had to sign his policies, a non competition agreement, I use his equipment, have set hours, and depend on him solely for money. He is now telling me I don’t earn ot because I am seasonal., yet I work 10 or 11 months a year. Someone please help

    • 10 til 2 says:

      Marshall: As we have stated, we are not attorneys; so we suggest that you get some legal advice from one or contact your Department of Labor. However, a few things seem to stand out in your comment. In our opinion, you definitely seem to be misclassified as an independent contractor, when you clearly seem to be a W2 employee (for example, independent contractors generally do not “get raises” but instead set their own rates. There are other telltales you mention that make it pretty clear that you are likely a W2 employee). In regard to overtime, we do not believe that being a seasonal worker (which you may or may not be) has anything to do with being paid overtime. Overtime is dependent on how many hours you work in a single work week, regardless of your employment throughout the year. This is all part of the Fair Labor Standards Act (FLSA). The following link will direct you to a FLSA fact sheet regarding overtime pay:http://www.dol.gov/whd/regs/compliance/whdfs23.pdf

      Good luck and please keep us posted!

  49. Steve Anderson says:

    In October of 2012 the employees were notified that the company was closing.

    However a small group of employees were retained to assist in the closing but since they did not want to pay for the payroll services, they said that we are being placed on 1099′s instead. Is this correct? They were still doing business to a degree, yet only on a smaller scale.

    • 10 til 2 says:

      It really depends on the dynamics of the work being done. Are the “1099 workers” able to work for other clients… do they set their own hours and determine their own hourly rate… things like these are the crux of what determines whether someone is an employee. So many people, including employers, are under the wrong assumption that they have a choice in how to classify workers. If you have concerns, check with an attorney specializing in employment law or contact the Department of Labor. Good luck and keep us posted!

  50. Jeanne says:

    Hi, my previous employers said that they would provide me with a 1099. For whatever reason, they decided that at the very last minute, they would give me a w-2 instead. Consequently, they had to pay all the social security that should have been taken out of my check in the previous year all at once. They are not requesting that I repay them the 1,000.00 that they did not take out of my check, but ended up paying when they decided to use a w-2. Am I responsible for paying them back this money? PLEASE HELP ME, they are being very aggressive about this.

    • 10 til 2 says:

      We assume that you mean that they are asking you for the portion you would have paid out, not cover their portion. Keep in mind that if you were to file your taxes as a 1099 you would still need to pay tax on your income. Definitely best to contact your Department of Labor or an employment attorney on this one.

  51. Mary says:

    We are RV camp hosts. We are directed on how to do the job, what hours to be open, where to do the job and with what to do it. We answer to a General Manager. We get less than minimum wage for the hours we work and are required to work those hours.

  52. Sam says:

    I have been working for a conglomerate in los angeles for past 9 years as contractor. I have put blood and sweat in their profits which is tangible. I never got a piece of profit sharing or 401 K or medical benefits. All the time there has been a middle vendor but i have been honoring work hours some times more than 9 some times 9 on premisses and been part of Management for quite some time. My questions in this case is after spending “n” number of days in the same company continuously and flagged as a contractor do i get a chance to ask them for my benefits.

    Thanks

    • 10 til 2 says:

      Sam, as we have mentioned, we are not employment attorneys, so we suggest that you speak with one or your local office of the Department of Labor for a more definitive answer. However, as we understand it, the amount of time you work for a business has no bearing on contract worker stats; the fact is, you can be an independent contractor indefinitely and never be entitled to corporate benefits. This is why it is important that you make sure you are not being misclassified as an independent contractor and, just as importantly, be certain that your hourly rate as an independent contractor is appropriate for the service you are providing. Independent contractors generally build their expenses (like health insurance, operational costs, etc.) into their hourly rates. Good luck and keep us posted.

  53. Ashlee says:

    I work for a company that demands us to be there at 9am-5 with set breaks, they also have us follow a dress code. We have a quota (that wasn’t even set in place when i started) i am for sure an employee, with the classification of a 10-99. If we don’t meet certain stats we can get fired (I can’t receive benefits I’m entitled to) Do i just call the local DOL and pursue it? With tax time around the corner I refuse to be subject to paying the IRS when this entire time I should have been having my taxes taken out.

  54. Steve says:

    Here’s my situation!
    For the past few years, I have been doing seasonal work for a small company, as an independent contractor. This job was another source of income!

    Before accepting this job, I always was an W2 employee, wasnt familiar with 1099 form.

    Anyways…the company classifies me as independent contractor, BUT I have to be to work at a scheduled time, a 30 min lunch break is automatically deducted if I work past 5 hours, they provided me with a company shirt and hat. I have also received an raise, in which I pursued after a few years of HARD WORK! Its also confusing that when I approached the company for the raise, I was informed that they had to get permission from the organization that they are contracted with. I am not an employee of the organization but yet they have control over what my employer pays me an hour? smh!

  55. Steve says:

    And I have even inquired about an W2 and was told the reason of the 1099 form is that the organization trying to prevent paying unemployment, due to high turnover rate. But I have knowledge that the manager of the company (relative of owner) and one other employee are on w2 status. All other employees are 1099! But i considering looking into it. Thanks!

  56. susan lange says:

    I am an employee, and the DOL is requesting that I document why I 1099′d quite a few of people that performed work for me. I pulled $30k in cash out over the year for printing and paying highschool kids to distribute flyers.
    others are “contract” processors that work from wherever they want, and they work for other companies too.
    your opinion?

  57. HJR says:

    Should I be paid more hourly when doing 1099? I am an IT Engineer Consultant doing project work but when I negotiate contracts a lot of times I am asked if i want to do 1099 or W2. Up until now I have always went with w2 because it was easier. I am really considering 1099 because I can write off a lot of my expenses. However I am not sure if I should be paid more or less or the same in comparison to a W2 contract. Please advise. Thanks

    • 10 til 2 says:

      HJR: Generally speaking, 1099 contractors determine their rates by taking into consideration the expenses incurred related to their service. Hard costs like liability insurance, office expenses, travel expenses, internet, etc. all contribute to the rate a contractor charges his or her clients. From an employer’s perspective, it costs less to pay a contractor $40 per hour than it does an employee, due to taxes and other costs inherent in running payroll; that is why many employers opt (often mistakenly) to classify workers as contractors rather than employees. This fact might work in your favor should you go the 1099 route and decide to ask for a higher rate.

      Keep in mind that employment status is usually not an arbitrary choice, but if in this case you can truly choose, then it is important to run the numbers to determine which option is most advantageous to you and/or determine if you need to increase your rate to defray some of your hard costs. Good luck and keep us posted!

      *We are not employment attorneys and our replies are strictly our own opinions. We suggest anyone with employment related questions consult an attorney or contact the Labor Department.

  58. Ralph says:

    I was previously employed by a contract company approximately 9 years. For personal reasons and in anger, I terminated employment. I realized I spoke out of anger and frustration and asked my employer to rescind my notice of determination. They refused to rescind, however, they said I was a valuable employee and offered me a position as a consultant (1099) employee. I am doing exactly the same job I was doing as a W-2 employee and all my work is directed by my supervisor. AM I really considered a 1099 employee?

  59. Karen says:

    I am being offered a sales position with a company. It is 100% commision. I have to be there from 8-5 M-F. They have a dress code. They are classifying me as a W-2 employee. This seems odd.
    Your thoughts on the benefits or not with this classification. They also do not provide ANY benefits.

    • 10 til 2 says:

      Karen:

      Hmmm. It sounds like there is a possibility of misclassification, so you may want to contact an employment attorney or the Department of Labor for clarity. You may also want to read “If It Quacks Like a Duck,” which lists some 1099 criteria and also has a link to the IRS website. Best of luck and keep us posted!

  60. Korey says:

    I am purchasing a semi and looking for a driver the Truck would be leased to a carrier. Would the driver be a 1099 or a w2? Please help.

  61. Janice A says:

    I am a “salaried” worker for only one company, with paid vacation, sick time and paid holidays. I work during business hours so clients can reach me, 40 hours/week, but I only ever work from home – usually never in the office. I invoice for my pay. I have to attend weekly and monthly “meetings” through Skype with the rest of the staff. I interact directly with the company’s clients, and have a title, work phone number and work email address with the company. I am assigned projects by a direct superior in addition to regular client requests, and I have deadlines on all projects. Does it sound like I could be misclassified as a 1099? Or does the fact that I work from home automatically mean I am 1099? Thanks!

    • 10 til 2 says:

      Janice:

      This one sort of sounds like a slam-dunk. If everything you said is accurate, we have a strong hunch that you are being misclassified as a 1099 contract worker. Working remotely has no impact on contractor status; many employees these days work from home. We strongly urge you to speak with an employment attorney (we are not lawyers) to determine your status and consider your options. Good luck and keep us posted!

  62. teri says:

    I hired some guys to do some work for me, not in my business, but help with building my house. One of the guys had his own business, hauling cars and scrap metal etc. We were tearing down our old house and he bid on tearing it down for us and we paid him on a rate of truck load haul a-ways. then when we started building the house we asked if he wanted to help us out with labor and he said that he could help out some, off and on. He had a friend who worked for him off and on and also worked for another guy (restored and resold vehicles). The project was a limited duration (basically over the summer). There were three guys who helped us pretty regularly. They all said that they had tools and at the beginning they brought their own tools, but later they asked if they could just use ours, for various reasons, but primarily because we had a few of each tool and our accessories were better suited for our tools. We have never built another house so we are not in the business of building houses. Each of the guys we hired signed documents stating that they had their own insurance and would not hold us responsible. There were no accidents and we paid them pretty much every day or on occasion, every other day, primarily because they weren’t necessarily going to work for us the next day. Each time we completed one section of the house (example we laid in the framing for the floor, we put up the log walls, installed the decking for the roof, and finished the metal roofing). We had to show the guys what we were doing and gave them basic instructions. They used their own ingenuity for getting some things done. In the end each of the 3 guys worked on different phases of the project, none of them worked on all phases and one only did a small concrete job ( a small sidewalk) because he had some concrete finishing experience. After we got a phase finished we would either ask the guys if they wanted to help on the next phase and also periodically asked if they knew anyone who might need a day, a few days or a couple weeks of work when the guys thought they could use some extra help. So one guy, who owned the hauling company, worked about 6 weeks at the beginning of the project. We tried to get him to keep a schedule, but he never did. The second guy worked about 2 or 3 months. He kept a more regular schedule, in that he basically came to work earlier in the morning (around 8 or 9 or 10) and stayed the better part of the day. He worked for a couple of other people, mostly working on cars or as added labor. It was irregular for the first guy to work more than 5 or 6 hours in a day because he had his business, he worke for his uncle and at least one other guy and he was building something on his property. Toward the middle of the project he sold his property and moved to the other side of the state. The second guy, worked for the first guy off and on and worked for another person. He never worked on Tuedsay, although every week I asked if he could. sometimes he said he would, but he never did. And he and the 3rd guy also worked for a guy who restored and resold old cars so if that guy needed them that seemed to always be their first priority. I think they had a long relationship with the car restored guy. The 3rd guy came in because we were going to lay a side walk and no one had any concrete finishing experience and the 2nd guy said that the 3rd guy wasn’t busy and might be able to help out for a few days or a couple of weeks. The 3rd guy helped with the concrete sidewalk and with a couple of decks. We hired an independent contactor to finish the last deck some other concrete work that we needed done. So these 3 guys worked for us on a temporary basis, not in our business and knowing that when the house was built we would have not work for them. They all filed documents that they had their own medical insurance. They had tools, but the regularly used our tools and we had to show them how to do some things. They were always asked if they wanted to help with the next phase. They were never hired on the basis that we would employ them if we didn’t have work they could do. Again, we don’t have a business and we have never built any other houses. Is there anyway that the IRS could construe their relationship in helping us with a one-time project when they picked and chose their own hours and jobs that they were interested in? We were never the only people these guys worked for 1 had his own business, also worked for his uncle and at least one other person, 2 worked for 1 sometimes and also worked for a guy who restored and resold cars, and 3 worked for the same guy that 2 worked for. 1 worked when he needed some cash to throw into his business, 2 worked more often but never came to work on Tuesdays, worked closer to 8 hour days, although when he was ready to leave at the end of the day he finished whether I wanted him to stay longer or not, and 3 only worked for a couple of weeks on the house and later did some automobile repairs for us because he needed some work and we needed some repairs. Since we’ve built the house, with the exception of a couple of automobile repairs by 3 and a one-day job by 2 (we hauled some wrc logs from a seller to our property and 2 helped one day (about 3 years after building the house). we didn’t furnish 1099′s to the guys. I think that 1 billed us for some of the work that he did hauling, but we just paid them cash daily for their work when they were helping with the house. They said they were keeping their own records of costs and wages.

    • 10 til 2 says:

      Teri:

      If you were paying the guys out of your own pocket, not from any business entity, then you are probably in the clear as they would likely be considered vendors. Think about it; if you hired a plumber to fix your sink, you wouldn’t consider him an employee… or even a contract worker for that matter. He would be considered a vendor supplying a service to you. If you were being paid as a general contractor by a client and then hiring guys to do the work, the answer might be different. As we have mentioned many times in this blog, our comments are merely our opinion on the topic. We suggest you contact an employment attorney or the Department of Labor for a definitive answer to your question. Good luck and keep us posted.

  63. Mary says:

    My son was paid by 1099 for years but required to punch a clock in/out/lunch and required to show up at a home office at a certain time and work until a certain time and was told what to do right up to where he could sit. Is this a true 1099 employee or W2? If so how or who do we report this to?

    Also, I received a 1099 from someone I didn’t work for. It was done with intent and malice. I have gone to the CPA handling this. But what are the repercussions for the person who did this?

    • 10 til 2 says:

      Mary: Your son sounds like he was an employee (unless perhaps he had multiple “clients” he did this type of work for). As to how to address both of your questions, you should consider talking to an employment attorney or the Department of Labor. Good luck!

  64. Mary says:

    Thank you for responding, No he was forced to sign a contract saying he couldn’t do that work for anyone else and couldn’t considering he was required to be there everyday on the timeclock! I have said all along it should be a W2 but they kept saying they could do that because they were a small business.

    • 10 til 2 says:

      Mary: There is so much misinformation out there regarding this subject; the size of the company has no bearing on worker status. That is why small businesses that can’t handle their own W2 payroll (which can be tricky) are best suited to engage an employment agency that puts the employee on their own payroll. Good luck and keep us posted.

  65. Jody says:

    My husband is going to start a new job in feb.This is what they told him..Best upon your performance,and our mutual desires,we would like to implement a 2 phase employment approach beginning and an Independent contractor with our team, and transitioning to a ft regular employment upon successful completion of technical and business mile stones…
    Is this right? It sounds funny to me.

    

    • 10 til 2 says:

      Sounds funny to us too. He might want to contact the Department of Labor. Or like Cindy mentioned, the IRS has a form that may help give clarification. Good luck to your hubby and keep us posted.

  66. Leslie says:

    I work for a small business (boutique) one day a week and I was given a 1099. Is that correct? Do I take taxes out of each paycheck to pay at the end of the year and if so how much?

    • 10 til 2 says:

      If you are truly a contract worker, it is a good idea to set some money aside out of each check for taxes. The amount depends on several factors, including your tax bracket (or the tax bracket of you and your spouse if you are married and file joint returns). For a definitive answer to your question, we suggest you contact either the IRS or the Department of Labor.

  67. Nick says:

    Hi I have left a company where I was hired as a w2 worker then I left and they sent me a 1099. They own 4 really big businesses (as in billions of dollars) so they know what they are doing but a trend I have noticed is that if anyone leaves their company they give them the short end of the stick on purpose I have texted them saying I need to get a w2 with no help. So I am asking for help on what to do

    • 10 til 2 says:

      Nick, did you fill out a w4 when you began the job? If so, it would seem apparent that they hired you as an employee and thus should be supplying you with a w2 (and they only have three days left to do it). Rather than texting them, you might consider sending a registered letter to their payroll department requesting a w2 and your reasons for the request. Will it burn a bridge? More than likely. So you need to weigh your options. Please know that we are not employment attorneys and these are just our opinions; for a definitive answer you should contact either a lawyer specializing in employment law or the Department of Labor. Good luck.

  68. Nick says:

    Yes I did fill out a w4 and thank you very much

  69. Dennis says:

    I’ll try to make this short and sweet. Last year my boss started a new company alongside the one I worked for him in so he could part ways with his partner. He asked me if I would work for him at the new company. I filled out an application and told him wrote what I wanted for an hourly rate. I also asked to keep my vacation time as well. I did not get neither but went to work for him anyway. I had a start time a lunch hour and a finish hour. 40 work week. If i was late he would get on me to be on time. As far as i knew i was an employee of his new company. He paid me with a straight check. Said it was a company check. He did not have a bookeeper at the time so he said So there was no check stub. As time went on i got more worried. I asked him when was he going to start taking deductions. At this time he said that he got a bookeeper and stubs would follow shortly. I was still treated like an employee with expectations from him as one. . He said he was going to give me a 1099. I never contracted anything with him. When i told the other emplyees about them getting a 1099 the were shocked. Everyone thought they were on the up and up as employees. Thats When the stubs started apearing i asked about the previous months and he said i was on my own. So there is a pprox 10k of income that i didnt know i was responsible for. I kept all my timesheets on my work computer that i had to turn in for that time period. I live in New Mexico. He seems confident that i have no recourse. I just got my w-2 and 1099 from the new company for the same year. Is that possible. Can he take advantage like that? Or can i inquiry at the labor dept?

    • 10 til 2 says:

      Dennis, while it speaks to how trusting you are, flares should have gone up when your employer handed you that first check. If the dynamics of your work have not changed, in our opinion, there is probably no justification he can give to his changing your contractor/employee status. And, yes, we do suggest you contact the Department of Labor for an official determination and what your options are. Good luck.

  70. Dennis says:

    Well that sounds ominous. I feel like an idiot. He knows its hard to find a job in this town. He knew I couldn’t just walk away. I just don’t know what he could have gained from all this except that he had us all fearing for our jobs because he submarined the old company. I would call him clever except I was duped so I feel embarrased by the whole thing. The last thing I want is problems with the IRS. Especially with the health insurance thing that I can’t afford. Okay well thank you for your time. I’ll make the quiry.

  71. Elijah says:

    I was a cook earning four hundred cash every two weeks for four months and I had to work six days a week.When I asked about my w2 I was told I wouldn’t get a w2 or a 1099 because they didn’t take taxes out. Is this right and where can I get help. I don’t have lots of money.

    • 10 til 2 says:

      Elijah: That is called working under the table; and your employer should know that it is illegal. Also, it sounds like if you were working much more than four hours a day, you were being paid less than minimum wage… also a big no-no if it is true. We strongly suggest you contact an employment attorney or the Department of Labor to help determine your options.

  72. Alex says:

    Thanks for the article.
    I am working for a company solar energy here in georgia and I have 7 months working vajo the 1099 because if he did not accept the way dque they acted not could work with them as they took several weeks without an income, but I meet with hours from 3pm to 3am ranging from 48 to 36 hours a week have a supervisor who tells me to do and some companions were nullified their work by late arrivals and take your break when the supervisor not allowed, how can I do to talk about this issue, as your article describes very well my situation thanks for your time

    • 10 til 2 says:

      Alex: It is hard to grasp the complexities of what you are writing about, but it does sound like your concerns are valid. We suggest you contact the Department of Labor for help or direction as to your options. Good luck.

  73. Mark says:

    I’m a web designer. I went into a interview to this company and they said it would be a 3 month to hire position so I chose this job, after 4 months I asked my boss about getting hired and he said that I should stay on contract I’ll get paid more, I told him I want security from my job and benefits. He said he would talk to upper management. After another month not hearing anything I asked him again he said that they aren’t going to hire for my position and that in a few months that I can be let go of. I feel used I dropped other jobs to come to this place because it was temp to hire now I’ve been contracting there for 6 months and they plan to dump me in 3. Any advice? Anything I can do?

    • 10 til 2 says:

      Mark: Unless the terms you mentioned were written into a contract, you are probably out of luck. While it may seem of little consolation, we suggest you use this as a learning experience so history doesn’t repeat itself… make sure to get everything promised to you in a signed contract. Understand that we are not employment attorneys; if you would like expertise on your situation you should contact one. Best of luck to you.

  74. Bobby Larson says:

    I worked for a wholesale floral company. I started as a delivery driver where I was a W-2. June 2013 I took over as an operations manager and given a small raise and was told after six months I will be given an evaluation and an adjusted raise. In November 2013 my wife and I inherited a little bit of money and we decided to put my 5 week income $5,000 towards my company’s 401 K which they will match. I had already contributed $7,000 since I had been with the company.
    On December 30, 2013 I called HR to acknowledge that this was in place and I was told yes. On January 3, 2014 when I went to work my boss and his boss came in from headquarter and I asked if this was my evaluation. They replied “no it was not necessary” but one of them asked how I felt about being an independent contractor and having to file under 1099. I asked how much they would be compensating me. Their offer was $1,000 per week with no benefits. (No life insurance, or 401k contributions) This was less than I was already making. I said no. So they decided to terminate my employment. After I left the company sent me a check for $12,000 and claim they are no longer offering a 401 K plan. No matching contributions or accrued interest! I have had to hire an attorney but he said there are a lot of scum bags and they are corporate jerks. The state department of labor also were not helpful. Workers beware!

  75. edgar gaona says:

    Hi, my cuestion its :
    I was working 4 this flooring company i was geting pay hourly
    With check but cash no deductions they provide materials and i have 2 be there whenbthey say (as a regular employee) can my boss 1099 me?

    • 10 til 2 says:

      Edgar: Probably not, but it is hard to say with such limited information. Best to contact the Department of Labor or an employment attorney for a definitive answer. Good luck.

  76. Katrina Ko says:

    Please if any can help me or give me some advice with my current situation..
    i worked a job that i had a feeling was somewhat “under the table” since we never got individual pay stubs, just personal checks. I was just a part time employee at a tea shop..i am a college student..
    I had asked my employer when she had us fill out tax forms, whether she was paying all our taxes and i made sure with her that we wouldn’t have to pay taxes at the end of the year.. and she said yes dont worry i am paying all the taxes for you guys already..

    the problem now is that i received a payment form from IRS saying that I did not report about $7000 of “nonemployee” income filed under 1099-misc
    and i have to pay the taxes for that (about $1500)
    i talked to my previous employer right away and she said she will ask her accountant..
    i dont know if my employer is really just clueless about 1099 and the law or what it is… but i talked to her several times about it and it has gotten nowhere.. she keeps coming up with new excuses..
    i dont feel like i should be the one paying these taxes.. i don’t have proof that she said she was withholding anything for me..what can i do if shes not taking responsibility?

    • 10 til 2 says:

      Katrina: Sadly, there is a lesson to be learned here. There are inherent risks, including possible illegal employment and nasty compensation issues, when accepting a job that is under the table. Are you aware that even legit employers who do everything correctly do not pay 100% of your income tax obligation? How much tax you pay is determined in part by how many exemptions you claimed on your W4 form. Did you actually fill out a W4?

      We strongly suggest that you determine your legal rights. Keep in mind that a lawyer will probably end up costing you more than the $1,500 you currently owe; so your best best is to contact the Department of Labor.

      Best of luck to you and keep us posted!

  77. Katrina Ko says:

    yes i had filled out a W4 form.. when i began working for them they had given me these forms to fill out so i figured she was doing taxes for her employees, that is why i asked her if she was withholding and paying the taxes and she said she was.
    Would i have the upper hand here since i am obviously not suppose to be filed as 1099..?
    it just doesnt seem right that i have to pay all these taxes..

  78. Shocker says:

    Am working as a independent contractor doing deliveries for a food delivery service where I get paid a personal check each week from the company that subcontracts me and get paid daily in cash for the tips I make. I get paid the delivery fee, $1 in gas for each delivery ( which employer pays me) and the tip. My employer (the company) tells me he’s giving me a 1099. I was not told I was getting a 1099 cuz I thought it was an off the books job, and where or even if does this fall under misclassification or should my employer be responsible.

    • 10 til 2 says:

      Oh, Shocker. There is so much to address here. In your first sentence, you claim that you are an independent contractor and then sound surprised that the company gave you a 1099. The fact is, independent contractors receive 1099 forms. Period, end of sentence. So the fact that you called yourself a contractor is in complete alignment with you getting a 1099. And let’s make it clear, if you are indeed a contractor the company is not your employer, but rather your client. Claiming that you are working off the books (AKA under the table) is no defense, in fact it is illegal, so we suggest you don’t pursue that route. Now that we cleared that up, you need to determine whether you are truly a contractor or should be classified as a W2 employee. If the company is supplying you with the truck, you are likely an employee. No matter what the outcome, somebody needs to pay Uncle Sam. Please keep in mind, we are not labor attorneys; we are simply giving you our opinion based on our knowledge of the employment sector.

  79. Angela Maturino says:

    I recently won a child support arrearages court case with my ex who with his fiancé own a small cafe. She is the legal owner. He tried to say he just helps out and didn’t get a salary but when the judge issued a seek to work order he decided he did work there and his fiancé put him on payroll. Fast forward a month after the case is done she takes him off payroll. DCSS says oh she probably has him on a 1099 and there is nothing you can do. Isn’t that illegal? He’s not a temporary employee.

    • 10 til 2 says:

      Angela: Temporary employees and 1099 contractors are two different things, so it is important not to get them confused. What your ex does at the restaurant and the manner in which he does it are two of the determining factors as to whether he is a 1099 contractor. If his employment status concerns you in some way, the matter is best left in the hands of your attorney.

  80. Ron says:

    I was a commission salesperson at a furniture company in Ohio. He refuses to pay the amount he owes me because he states i was an independent contractor. What requirements are needed to prove i was an employee?

  81. Susana D says:

    OK, so my boyfriend and I worked at the same place, a restaurant, both as servers. I was given a W-2 and he was given a 1099. The difference is our legal status. I have a social and when he first worked there he did not. He had a tax id number ( whatever that is lol). During the year, he finally received his work permit that and got his social security number. He gave it to our manager. Fast forward, we both quit at different times, I got my W2 a month ago and he JUST now got something. Only because we were annoying the accountant for the restaurant. But what he received was a 1099. We are both confused as to why he was given the 1099. Because he didnt have a social? He says he had always received a W2 regardless of his lack of ssn before this restaurant. Any advice or suggestions as to why he was given a 1099 in lieu of a W2? ( We were both servers and performed the exact same duties/jobs).

    • 10 til 2 says:

      Susana: We are not employment attorneys, so we suggest you or your boyfriend speak to one or call the Department of Labor in your state. But we will tell you this: Claiming a restaurant server is a 1099 contractor sounds absolutely ludicrous in our opinion. Good luck to your BF and keep us posted.

  82. seth says:

    Okay, so I was hired last year to clear out, repair, and and clean houses for resale by a contractor to these jobs for real estate agents. Now he said we were independent sub contractors.. But he told us what our daily pay would be, when we had to be at work, what we could or couldn’t do, when lunch was, and when we went home. Now I’ve never done this work, nor do I know the rules, laws, or my rights. But he was my boss so I did as he said. Im only 20 yrs old and I’m confused as to whether not I should be 1099 or W2. I don’t have much money and don’t believe I can afford 1099 taxes. Was I misclassified? And if so do I file or how do I go about this the right way so the IRS isn’t hounding me..

    • 10 til 2 says:

      Seth: First, independent contractors do not have bosses or employers; they have clients. It definitely sounds like you were told the exact way in which to provide your service, which would seem make you a W2 employee. Here is a great tip for future reference: Upon being hired to any position or contracted for any job, you should be given either a W4 form or a W9 form to complete prior to starting the work. W4 means they are treating you as an employee and the W9 means they consider you a contractor. But these are not arbitrary choices the “employer” can make. Check out this page on the IRS website to see how it explains the parameters of employee versus contractors. As we have mentioned, we are not employment attorneys, so if you have any further questions we suggest you speak with one or contact the Department of Labor in your state. Good luck.

  83. seth says:

    Also, I’m working out of Illinois and was fired on the job for accidentally breaking a mower while being told to mow 1ft tall grass…

  84. Susan says:

    so, you explain the difference between a ‘duck’ and ‘not a duck’ very clearly. And advising employers not to do this.
    My question is this: if an employer wants to hire someone on, with 1099 status, even though really they should be an employee, is there any legal or tax risk to the ‘employee’ if they accept this status.

    • 10 til 2 says:

      Susan: While we are not certain that there would be any legal risk for an average employee to mistakenly accept a position classified as a 1099 contractor, they are then stuck with the entire tax burden due Uncle Sam. We are not employment or tax attorneys, so for a definitive answer to your question we suggest that you contact one or the Department of Labor in your state.

  85. Caroline says:

    Full time employee, been working for a company a year. Brought in as “part time.” When benefits were supposed to kick in, status was changed to “temp”. Therefore no benefits, yet no staffing company involved. Full time hours. Treated as or should be a W2 employees. Is this legal, not getting benefits (PTO, insurance…)

    • 10 til 2 says:

      Caroline: According to the government, there is no such status as a temp; you are either a W2 employee or a 1099 contractor. Did you sign anything that outlined the dynamics of benefits and employment status at the onset of the job? If so, they are likely contractually obligated to honor whatever promises they made. We think this is worth looking into; as we are not employment attorneys, we suggest you speak to one or contact the Department of Labor in your state. Good luck and keep us posted.

  86. Judy says:

    My son spent last summer working approx. 60 hours per week mowing lawns for a lawn mowing service. He used their equipment and was directed daily on where to go and exactly what to do. He was paid cash and issued a 1099. Of course now that it is tax time he is being required to file as self employed and pay the employers 7.65% fica tax. Should he be a W-2 employee and should I file a SS-8? Also, if he is reclassified as a W-2 employee is he entitled to any overtime compensation (he was paid only straight time)?
    Thank you

    • 10 til 2 says:

      Judy: It is interesting that so many business owners think that just because their company is an independent contractor, that their workers are too. A great deal of the time this is simply not the case. People need to be aware of how their job status is addressed at the beginning of their contract or employment. All W2 employees are required by law to complete a W4 form, on which they record information including their exemptions. If one is not asked to fill out a W4, then they should have some very strong questions and concerns as to their employment status. We are not employment attorneys, so we suggest you contact one or the Department of Labor in your state. The silver lining is that he learned a valuable lesson early on that should stick with him throughout his future employment. Good luck and keep us posted how everything turns out.

  87. Ed says:

    Worked 3 years as full time (w2) employee. Company bought out. Being switched to 1099 employee for 60 days. If no positions will be laid off. Worried about the 1099 tax implications. Am I technically laid off right now and can seek DUI benefits?

    • 10 til 2 says:

      Ed: First off, there is no such thing as a 1099 employee; the term 1099 refers to independent contractor status, which basically means that your provide a service that is beyond the scope of being an employee. As far as you technically being laid off, you might have a strong argument there. We are not employment attorneys, so for a definitive answer to your question, we suggest you contact one or the Department of Labor in your state. Good luck… we would love to know the outcome.

  88. William says:

    Ive been doing construction work since april of last year. I have been using there tools, vehicles, t-shirts (supposedly for advertisment) the whole time. They gave me a 1099 form. My brother also works for them and is in the same boat as me. I’ ve always been told when to report to work. They also aren’t negotiating pay with me. Ive been getting paid $8 hourly the whole time ive worked with them. In the month of January me and my brother did a mold job for them using the equipment and safety materials they provided. My brother got sick due to an allergic reaction to mold and insulation. Before we even started the job the employer told us that if we refused to do the work that they would fire us. Now my brother has an unpaid hospital bill and the employer is telling us that he isnt legible for workers comp. I know for a fact that he has to have workers comp insurance because he has more than 3 people working for him. Is he suppose to be held liable to pay that hospital bill since we are really suppose to be employee’s? I also Know that my employer has miclassified us as an independent sub-contractor. What are my right’s? Would I have the right to sue?

    • 10 til 2 says:

      William: We strongly urge you and your brother to contact an employment attorney, as we are not lawyers and it certainly sounds like you need one. Good luck and keep us posted.

  89. Gail Suzanne says:

    To all of you who have been laid off from a job as an “independent contractor” – file for unemployment. If you are indeed a misclassified employee you will qualify for unemployment and the employer will be fined and possibly investigated for employment law violations. How do I know this? It happened to me. I got unemployment benefits, and the Fortune 500 company I worked for is getting investigated and fined. Guess what my former employer is not doing anymore.

  90. Ethan says:

    I have been working for past 2 years as a contractor for a vendor but on client site about 47 miles from my home, 5 days a week and something one days from home in month, where clients provides laptop and other things which are required for me to complete the work. I have been told to be in the office at 9, work on this which they want to me to and run projects, give them status and one hour lunch break. I have been on W2 with the vendor where he cuts all my taxes Fed, State, SS and MC, State Disability but does provide me Insurance, basically the insurance they offer me is paying my insurance myself would be cheaper.

    Now question is what they are telling me is wrong to be in the office on time by 9,drive 47 miles, use my own gas, use my own phone to take and make calls as need when home for meetings and vendor is not ready to convert me to 1099.

    Can i deduct all these being on W2 with vendor where they can kick me out the next day and not pay anything for not worked days and PTO.

    I have rented a small place below my house (House is also rented, i don’t own it) for office use as my house is too small to conduct any meeting or to set up a home office. Can i deduct these mentioned about items my taxes or no….

    I don’t know how they are classifying me but i do get w2 at the end of the years. but my job is with no benefits are all just salary.

    Help me please. Thanks

    • Ethan says:

      Sorry forgot to mention. They make us work more than 8 works and not paying overtime for off source meetings taken from home in the evening or at night.

      This is wrong I hope?

    • 10 til 2 says:

      Ethan: First off, if you are getting a W2, you are being classified as an employee not a contractor (sounds like your boss, AKA the vendor, is a contractor, but you are an employee of the vendor). Also, if you are a salaried employee, your employer might not be obligated to pay you overtime and is only obligated to extend certain benefits to you (like those mandated in the Affordable Care Act and Family Medical Leave Act). We are not attorneys; if you have concerns regarding your employment you should speak with one or contact the Department of Labor in your state. You might also contact a tax professional regarding what you can and can’t write off. Best of luck to you.

      • Ethan says:

        Thats the confusion, they are classifying me as contractor on the contract they got me signed and pay me hourly 80 hours bi weekly and 160 monthly and if i take a day off i don’t get paid but i’m on W2, which doesn’t make any sense that how they are running this back in their system and under what they have classified me.

        This is so annoying that i want to take an action on this and get things straight out but before I do that i want to know at least that whether I have been duped out or not.

  91. Cindy says:

    Here’s my question – if an employee is being paid as a 1099 and is told when to be there, what to wear, when to take lunch and uses all their computer programs and software and works only 32 hours per week are they still a 1099 or should they be classified as a w-2? In other words, do weekly hours have any affect as to whether or not you are a w-2 or a 1099??

    • 10 til 2 says:

      Cindy: The number of hours you work really have no bearing on whether you are a 1099 contractor or an W2 employee; everything you described sounds exactly like a W2 employee. Please keep in mind that we are not employment attorneys; if you would like a definitive answer to your question we suggest you speak to one or contact the Department of Labor in your state. Good luck.

  92. Sarah Evans says:

    I have a question: I’ve been 1099 for a non-profit in the first quarter of this year. I recently was hired. the accountant tells me he must deduct taxes for the first quarter right now. he says you cannot be a 1099 and a w2 in the same year. That makes no sense to me. plenty of people go from contract to permanent in a year or from w2 to contract. Is what our accountant saying true?

    • 10 til 2 says:

      Sarah: It might sound odd, but it is likely true and has to do with how employers file their workers and EIN with the IRS. While it might seem annoying to you, you will likely be better off in the long run because as a 1099 contractor you would be responsible for a much larger portion of the tax burden accrued in Q1… this way, your employer will be picking up a good chunk of it. Keep in mind that we are not employment attorneys, so for legal expertise we suggest you contact one or the Department of Labor in your state.

  93. pricklypear says:

    What if you have an “on call hotel babysitting service”? Let’s say these providers have inconsistent hours and their total number of jobs can be once a week – once a month- 10 times a month, but the Agency collects a booking fee – and the parent who hires them for the babysitting job at the hotel (as a vacationer to the area – like Hawaii) – pays the nanny cash only…….

    • 10 til 2 says:

      Pricklypear: Sounds like the babysitters are independent contractors, as we assume they can refuse the work, don’t have a specific dress code/uniform and essentially don’t have an employer beyond the scope of each individual babysitting gig. We are not employment attorneys; if you want a definitive answer to your question we suggest you contact one or the Department of Labor in your state.

  94. pricklypear says:

    Yes, they can refuse the job… don’t have specific hours and don’t have a uniform. And as for the Dpt of Labor – that’s what my insurance agent told me as well… Thanks!

  95. Terry says:

    i have been working in a private company for almost a year now and yesterday my employer told me that I have been laid off. I was w2 since i started with them but now I asked them if I can do a 1099 for my last paycheck, and they said they will not do it with no explanations or whatsoever, can they do that or is it my right to change from w2 to 1099? thank you so much

    • 10 til 2 says:

      Terry: W2 and 1099 status is not an arbitrary decision one can simply make on a whim. You either qualify as a W2 employee or you are a contractor; it is pretty much that simple. So if you were a bona fide employee for the duration of your time with the company, you can’t just opt to switch employment status. Also, from our understanding, an employer cannot file you under the same EIN as both an employee and a contractor within the same calendar year. We are not employment attorneys; for a definitive answer to your question, we suggest you speak to one or contact the Department of Labor in your state. Good luck to you.

  96. josecuervo says:

    I live in Austin, Texas.
    I was offered a 1099 sales job for an internet start up of 7 employees.
    My concerns are in reference to
    1 residuals
    2 profit sharing
    3 stocks
    4 no benefits
    The base is good
    If I am 1099 I am curious why I was emailed anything related to timekeeping
    He also sent me a non compete
    I am in the internet industry
    2/3 of Austin jobs are internet
    The non compete will be an issue in the future
    What do you suggest ???

    • 10 til 2 says:

      joesecuervo: Sounds like you have some valid concerns; we suggest you contact the Texas Department of Labor for clarification. Good luck.

  97. Ally says:

    I just was offered a full-time, salaried position, working 9-5, set hours in a company office. I was told I would be a 1099 employee for the first 90 days. I have never been a 1099 employee, always a W2. This is not a sales or commissions job. I am expected to work 40 hours a week, report to my boss, follow all company rules, use company computers and office supplies. Why would I be a 1099 employee for the first 90 days? I’m very confused and concerned how this well affect my taxes. Any advice?

    • 10 til 2 says:

      Ally: Not sure if this is the case in your situation, but sometimes companies will use an outside staffing firm to run payroll on new employees for the first 90 days of employment. This mitigates the company’s costs while they determine if a new hire is the “right fit” for the company (bringing on a new employee costs employers a ton of money). If you have not already accepted the position, you could certainly try to negotiate those terms if you think it is in your best interest; you might also consider talking with the HR department to learn how all this affects your taxes. We are not employment attorneys; for expert advice on your question, we suggest you speak to one or the Department of Labor in your state. Good luck and keep us posted.

  98. Sean says:

    If the NY labor board is auditing a company, what would my exposure be if i were improperly classified as a 1099 employee?

    • 10 til 2 says:

      Sean: Your question is a good one; in all likeliness the board will review all employee and contractor records. From our understanding, while misclassified contractors don’t get compensated for the extra portion of the taxes they paid during the time they should have been classified as a W-2 employee, there is likely no added financial burden either. Please understand that we are not employment attorneys, so for expertise on this subject we strongly suggest you speak to one or contact the NY Department of Labor. Also, you may want to read this informative blog post entitled “Misclassification of Employees as Independent Contractors – What’s That Mean?” on the LexisNexis website. Good luck and keep us posted.

  99. Kenny says:

    I’m an electrician. I’m being told I have to be to work at 7 o’clock and I’m not allowed to leave until the job is finished. It could be 4 o’clock or It could be 9 o’clock at night when I get off work. I have to take a 30 minute lunch. All electricians have to supply small hand tools. And he supplies the bigger tools. I feel like I should be getting my w2 but he gives everyone a 1099. Is this legal?

  100. Kenny says:

    I also have to drive his company truck.

    • 10 til 2 says:

      Kenny: Sounds like you might be misclassified as a contractor. This happens a lot in service companies; owners of these businesses often mistakenly assume that because their companies are considered contractors, their employees are also contractors (which isn’t necessarily true). As we are not employment attorneys, we suggest for a definitive answer to your question that you contact one or the Department of Labor in your state. Good luck and keep us posted.

  101. Lesley says:

    OK I work for a lady who has her hands in a little of everything… Cleaners and painters that may move from place to place days and pay may very… however I work set times set days and set pay at one place. She gives everyone a 1099 but she cuts everyone .07% out of each check and now she want every including us how stay in one spot with same hours and same pay to go get a business license but not to work here at her place but tell the we want to open our own cleaning company? How is this right?

    • 10 til 2 says:

      Lesley: Not sure that is is.We suggest you contact the Department of Labor in your state. Best of luck to you.

  102. David says:

    I’m not sure I understand why it really makes a difference as long as the employer and the employee agree on salary and benefits. Does Uncle Sam get more or less either way?

    I want to work part-time, special projects. A company brings me in for a limited amount of time until the project is over. Full time, in the office, with a boss, set hours etc. I’d base my compensation on having to pay both shares of FICA and submitting my quarterly tax obligations. I don’t want any benefits and wouldn’t expect any.

    1099 just seems easier to work when I want and much more flexible.

    • 10 til 2 says:

      David: While self-employment tax is generally equivalent to the combined employer/employee tax contribution, Uncle Sam does likely generate more revenue from employees rather than contractors. For example, contractors do not have to pay self-employment taxes if they earn under $400, while employers have to pay FICA starting with the first hour an employee works. The self-employed also often claim more deductions when filing their taxes (half of self-employment tax, i.e., the employer-equivalent portion, is allowed as a deduction against income for contractors).

      There is also a fairness issue, as employers often misclassify workers to avoid paying their portion of the tax burden and often pay these workers the same hourly rate they would an employee even though the worker carries a greater portion of the tax burden.

      In the scenario you pose, there are two things that stick out. One, when you are a contractor, you don’t have a boss, you have a client (even if you need to report to someone, he/she is usually considered a client). On the other hand, you set your own compensation at a rate you feel reflects your added tax burden as a contractor; which is good.

      Sounds like you are savvy and going into this informed; unfortunately, many workers have no idea how misclassification can affect them.

      Keep in mind, we are staffing specialists, not employment attorneys. For a definitive answer to your question, we suggest you contact the Department of Labor in your state.

  103. Elle A. says:

    I am a full time student working part time at a company and I am classified as a 1099. I wanted to be a W2 for end of the year filing purposes, but my boss said that if I make less than $7,500 a year (which I will) then I wouldn’t have any taxes to pay when I filed. Is this true? I chose my hours, and the jobs they give me here are not extremely specific nor do they have any set time to be completed by, so I’m guessing I am correctly classified.. But I want to have my facts straight by the time filing comes around.

  104. Pauline says:

    Hello

    I hired a friend of mines to do on-call work for me for about a year.

    She would call clients based on their appointment times made with me.

    Would she qualify as an employee or a contractor?

    I didn’t assign her a fix time or hours, everything was done by appointment. If she was not available to call the client, I would make the call myself.

    Please let me know thanks.

    • 10 til 2 says:

      Pauline: There are more things to consider when determining contractor status. We strongly suggest you contact the Department of Labor in your state for the answer to your question. Best of luck to you.

  105. Leon says:

    I recently accepted a job through a temp agency as a data analyst. The temp agency gave me a 1099 form, but I didn’t think anything of it until now. This is my first time dealing with a temp agency.

    I work 8 hours a day, Monday through Friday. I only work for the data job, at the data job’s location. The data job tells me what to wear, when to arrive and leave, and when take my breaks. They have trained me to use their equipment, and told me how to work.

    So, why has the temp agency given me a 1099 instead of a W2? Will this be a huge headache for me come tax time? I REALLY can’t afford to be hit with any tax penalties, and now I’m very nervous about what to do.

    • 10 til 2 says:

      Leon: It is hard to say whether you are an employee or not; but you should know that staffing companies are not immune to contractor misclassification. We are not lawyers; so we strongly urge you to contact the Department of Labor in your state or an employment attorney for a better understanding of your situation, your rights and your options.

      Whether you are misclassified or not, you likely will not be hit with any penalties per se; but as a contractor you are responsible for a greater chunk of your employment tax burden (now you can see why employers are tempted to misclassify employees as contractors). That being said, it is wise that whenever you are doing contract work to set aside a portion of each check for Uncle Sam so there are no surprises come tax time.

      Here is an interesting article on MOndaq.com regarding the risks staffing agencies assume when they misclassify employees: http://www.mondaq.com/unitedstates/x/217738/employee+rights+labour+relations/Staffing+Agencies+Using+Independent+Contractors+Face+Misclassification+Liability+And+Expose+Clients+To+Undue+Risks

      Good luck and please keep us posted.

Leave a Reply