What is a 1099 Contractor?

A 1099 contractor is a person or entity contracted to perform work or provide services to another company, person, or entity as a non-employee.

Workers who are 1099 contractors are required to pay their own Social Security and Medicare taxes, and are not afforded many of the rights and privileges afforded to employees.

What Rights and Responsibilities Do 1099 Contractors Have?

Workers who are classified as 1099 contractors are required to report all income and expenses to the IRS themselves, and submit their own self-employment taxes to the agency.

As of 2019, independent contractors pay 12.4 percent of their income in Social Security contributions, and 2.9 percent in Medicare payments. Many 1099 contractors pay taxes to the IRS in quarterly sums, rather than all at once at the end of the year.

What Jobs are Often Classified as 1099 Contractors?

In today’s gig economy — a slang term for jobs that are temporary or subject to short-term contracts — many jobs are being classified as independent contracting positions. Independent contractors may include doctors, veterinarians, dentists, lawyers, freelance writers, software designers, ride-share drivers, and truck drivers.

What is the Difference Between a 1099 Contractor and an Employee?

There are several criteria that must be met in order for a worker to be classified as an independent, or 1099 contractor, rather than as an employee.

According to the U.S. Department of Health and Human Services, when a worker is classified as a 1099 contractor, the employer cannot control or decide how the work is completed. Employers can only control the quality and result of the job. When workers are classified as employees, employers control the output and pace of the work.

Additionally, the IRS explains, employees are entitled to various benefits, such as having Social Security and Medicare contributions withheld by their employer, participating in employer-sponsored retirement plans, being provided with or reimbursed for necessary tools or uniforms, and being eligible for workers’ compensation programs.

Skilled workers who use their hands, such as a plumber who is hired by a company to complete a job, but has his or her own plumbing business outside of their contracted services, may be a 1099 contractor. Most 1099 contractors complete work that is outside the normal scope of business for the company that has hired them.

Due to the expense of classifying workers as employees rather than 1099 contractors, many companies misclassify workers as independent contractors to avoid paying benefits and taxes. If you have been wrongly classified as a 1099 contractor by your employer, you may be eligible to hire an experienced attorney and pursue compensation including reimbursement and punitive damages through a class action lawsuit.

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Even if you are classified as an independent contractor, you may be entitled to minimum wage, overtime pay, reimbursement for expenses, and meal and rest breaks, among other employee benefits.

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This article is not legal advice. It is presented 
for informational purposes only.