1099 vs W-2 Worker Classification Checker

Is your 1099 contractor legally an employee?

Answer sixteen yes/no questions about how you actually work with someone. You get a read on the IRS test, the Department of Labor test and the state ABC test, the facts that push toward employee status, and a range for what a misclassification could cost in back payroll tax and unpaid overtime.

Screening checklist, not a ruling. Use "Not sure" when you do not know: it is never counted in your favour.

1. How the work really happens

2. What a misclassification could cost

Annual pay to one worker ($)

Hours worked per week

Years classified this way

Workers in the same situation

I filed 1099s for this pay

Pay was the same no matter how many hours (no overtime premium paid)

An agency could call it willful (three-year look-back)

Questions people ask

Is a worker a contractor if they signed a contractor agreement?

No. The label in the contract does not decide it. The IRS, the Department of Labor and state agencies look at how the relationship works in practice: who controls the work, who carries the financial risk, and whether the worker runs an independent business.

What is the ABC test?

Several states, including California, Massachusetts and New Jersey, presume a worker is an employee unless the hiring business shows three things: the worker is free from its control (A), the work is outside its usual course of business (B), and the worker is independently established in that trade (C). Failing any one prong makes the worker an employee for those laws.

What does misclassifying a worker cost?

Back payroll taxes, usually the employer share of Social Security and Medicare plus a share of the amounts that should have been withheld, unpaid overtime if hours went over 40 a week and sometimes an equal amount in liquidated damages, plus state taxes, interest and penalties. This tool estimates the federal tax and overtime pieces as a range.

Is this legal advice?

No. It is an illustrative screening checklist. Whether a particular worker is an employee depends on the facts and on the law of your state, so check the answer with an employment lawyer or a tax professional before you rely on it or change how you pay anyone.

What this does not cover

State-specific tests beyond ABC, industry carve-outs (for example the many statutory exemptions in California's AB 5), the IRS Voluntary Classification Settlement Program, the Section 530 safe harbor, state unemployment and workers' compensation, penalties and interest, the Social Security wage base, minimum wage and meal-break claims, and joint-employer questions. A lawyer or tax professional can tell you which of these apply to you.

Related tools: the employment contract checker, the freelance contract checker and the employee cost calculator, for what a reclassified worker costs on payroll.