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New Employee vs. Contractor Rule... and Why It Won't Change Anything
15 June 2023
For W-2 Employees vs. 1099 Independent Contractors, a New Rule is Likely to be Finalized in October
I've taken on the topic of W-2 Employees vs 1099 Independent Contractors multiple times. There's a new rule likely to be finalized in Oct… a new rule that does not really change anything IMO.
This is a common debate/discussion/point of confusion among RESIDENTIAL CONTRACTORS.
• Most common employer question: Why should I take on the expenses/risks of having employees?
• Most common “worker” question: Why shouldn’t I take the tax advantage of staying a subcontractor?
• Easy answer #1: Because neither of you have much choice in the matter.
• Easy answer #2: Because a Brand cannot be properly represented without employees.
For decades, there have been laws and regulations in place guiding the classification of employees vs subs. Schedule control, material support, financial freedom, etc… All are intentionally vaguely defined terms. These have served nobody, except for the government agencies in charge of enforcing violations and the bottom-feeding lawyers that take on the cases of disgruntled ex-subs because they discover they should have been employees all along.
How can you control the representation of your Brand if you rely on subcontractors who are not beholden to you by law? The SECOND you provide a work schedule, instruct them to wear a logoed shirt, provide general tools/equipment, or allow them to drive a company vehicle or carry a company phone, they are an employee.
Funny thing is… Individuals (sub, employee, employer) do not have the LEGAL AUTHORITY to waive their basic employment rights. ANY document is considered null and void upon discovery of misclassification (most commonly after a serious injury) and the EMPLOYER is immediately and retroactively held accountable for the cascade of regulatory consequences. Not fun, and in my opinion… Not worth the risk.
Protect your team. Protect yourself. Protect your BRAND!
Home services companies might be tempted to classify workers as independent contractors, but we STRONGLY advise you to hire them as W-2 workers instead. And it's not just because the government might fine you (big time!). Read more for tips on why it'll be in your company's best interest.
Listen to The H.R. Guy explaining the nuances of HR for the Trades in 2025, with tips on common HR pitfalls and how to avoid them, the value of Stay Interviews, key mistakes with performance pay, and the ultimate goal of "Representing the Brand."
You thought you were rid of that toxic employee, but now he's causing you even more problems - posting negative Google reviews and refusing to return company property. Why is this happening?
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Deducting money from employee paychecks is a given (taxes, anyone?). But there are legal nuances, especially when it comes to loan repayments and final paycheck deductions. Here are a few tips to keep you out of trouble.