Short advice by Mike Andes distinguishing W-2 employees from 1099 subcontractors. Key criteria: required uniforms and fixed schedules indicate W-2 status; autonomy over hours, equipment, and uniforms indicates 1099 status. He warns employers that misclassifying workers to save payroll taxes can lead to fines and that workers benefit from W-2 income for loans, leases, and car payments.
Well, should I have a 1099 or should I have a W2? Here's the really easy answer. You're a W2 employee if you have a uniform and you're required to show up at a certain time. If you're requiring people to be at a certain place at a certain time and they're wearing your uniform, they're probably a W2 employee. On the other hand, if someone's allowed to clock in and out whenever they want, if they're able to wear their own uniform and they're much more autonomous with their own truck and own equipment, they're probably a 1099 or a subcontractor. Although it might save money for the employee in the short run, although it might save the the business money in the short run by saving on payroll taxes, in the long run, the business will eventually get fined, they will be caught, and it will not be worth it. Also in the long run, the employee will need W2 income to be able to get a loan, to be able to go out and get a lease at an apartment, to be a car payment. These are things that are required to be able to prove income. And if they don't have that, eventually they've got to move on.
