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1099 Contractor Compliance -
A Message to Employers

The success of your company will depend on the contributions of many people, and you may rely on the use of independent contractors.

Within the US, a non-employee / independent contractor workforce requires special attention. Legally, these workers are required to be treated differently than your own employees. Yet, as a practical matter, contractor and temporary employees are often key members of the team, valued and involved as the other workers who are direct employees of the employer.

A large amount of companies have increased their use of independent contractors. This trend has caught the attention of the IRS. The IRS has a legal definition of an independent contractor, and if workers don't meet that definition, they may be considered by law to be treated as employees. At that point, the IRS can fine an employer in addition to collecting for back taxes and withholdings that should have been paid. The IRS can require an employer to pay those fines even if the contractors have paid all their taxes.

Additionally, employers need to be sure that they are protected against loss, injury and or damages caused by or related to their temporary help, so you want to make sure that the appropriate insurances are carried by the Temp Agency or independent contractor.

To help you understand your responsibilities in this area, we have prepared a guide to clarify what the employer's obligations are, and to assist you in the management of independent contractors.