Don’t let the tax form make the decision.

It’s something we hear from business owners more often than you might think:

“I 1099 my staff.”

But issuing someone a Form 1099 doesn’t make that person an independent contractor.

The question isn’t simply, “Do I give this person a W-2 or a 1099?” The real question is whether the person is legally an employee or an independent contractor based on the actual working relationship.

Why Classification Matters

For business owners, getting that distinction right is important.

Employees are generally entitled to protections that don’t apply in the same way to independent contractors, including minimum wage, overtime, meal and rest breaks, workers’ compensation coverage, and other employment protections.

Misclassifying an employee as an independent contractor can expose a business to unpaid wages, taxes, penalties, and other liabilities.

And here’s where business owners can get into trouble: you may not realize you’re misclassifying someone.

A worker may invoice you. They may work remotely. They may even prefer to be treated as an independent contractor. None of those things, by themselves, determine whether the classification is legally correct.

Know Before You Classify

California has specific rules for determining whether a worker can properly be treated as an independent contractor.

If your business uses independent contractors—or you’re considering bringing one on—it’s worth making sure the relationship is structured correctly before a classification issue arises.

California has specific rules for determining whether a worker is an employee or independent contractor. Read our guide, “Are Your Workers Employees or Independent Contractors?” for a closer look at the ABC Test, potential consequences of misclassification, and questions employers should consider before classifying a worker.

Not sure if your workers are classified correctly?  Contact Chase Law Group or call us at 310-545-7700 to review your worker classifications and help protect your business from costly misclassification issues.

Not sure your workers are classified correctly?
Contact Chase Law Group or call 310-545-7700 before misclassification becomes a costly problem.

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_{Please note that this article is for informational purposes only and should not be considered legal advice and does constitute an attorney-client relationship. It is recommended to consult with an attorney and your insurance carrier directly for specific guidance pertaining to your business and its practices.}