W2 Employee or 1099 Independent Contractor? A Quick Primer

From the Work Market Blog —

“Ultimately, determining how to classify and pay a worker depends on the business relationship that exists between you and the individual. Information that provides evidence on the degree of control and independence falls into three categories (via IRS.gov):
Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
These three factors must be considered when determining whether a worker is an employee or an independent contractor. It’s important to note that there’s no silver bullet when making such a determination. Some factors may outweigh others and every situation is different.
The IRS is more likely to classify a worker as an independent contractor if they:
earn a profit or suffer a loss from the activity
are supplied the tools and equipment needed to perform the work
are paid by the job
work for more than one company at a time
pay their own expenses
set their own working hours.
Alternatively, the IRS is more likely to classify as an employee a worker who:
can be terminated at any time
is compensated by the hour
receives instructions from the company
receives training from the company
works full time for the company
receives unemployment benefits…”