“Best Practices for Managing 1099 Workers as Independent Contractors, Not W2 Employees!
Once you’ve decided that a worker is indeed an independent contractor, not an employee, there are things you can do to affirm the validity of that decision.
The US Bureau of Labor Statistics estimates that anywhere between 6.9% and 9.6% of the total workforce are “independent contractors” . That’s 10 – 15 million workers.
What are some of the best practices for managing independent contractors?
There are several ‘best practices” for managing 1099 workers that are relatively simple to execute. Here’s just a few.
Vet your independent contractors carefully – making sure that if they do business with you they have the required business licences, both a Federal ID # and a local UI #, and that their tax liabilities are current, etc.
Their onboarding needs to be handled very differently than the onboarding of an employee hired direct. They fill out a W9 not a W4. You never give them an employee handbook. A “how to do business with our company” handbook would be much better!
Develop an independent contractor agreement that, among other things, acknowledges the intent of the independent nature of the relationship and formally waives any rights the worker might claim to access a company sponsored health or retirement benefits.
Include in your agreement an indemnification clause that excuses your company from any liabilities associated with your independent contractor’s failure to pay their own self-employment taxes.
Create internal policies to guide how your hiring managers work with independent contractors – making sure they are aware of the importance of “independence”.
Review your current benefit plans to ensure they contain clear definitions of who can participate in the plan and specifically excluding independent contractors.
Conduct regular audits of any 1099 workers, ensuring their contracts are current and being managed as agreed
PACE Staffing Network is one of the Puget Sound’s premier staffing /recruiting agencies, helping Northwest employers find and hire employees based on the “right fit” for over 50 years.
A 5-time winner of the coveted “Best in Staffing” designation , PACE is ranked in the top 2% of staffing agencies nationwide based on annual surveys of customer satisfaction. PACE services include temporary and contract staffing,temp to hire auditions, direct hire professional recruiting services, Employer of Record (payroll) services, and a large menu of what we call HIRING HELP that allows clients to purchase a variety of candidate screening and assessment services on an ad hoc basis, augmenting your internal staffing or hiring resources.
To learn more about how partnering with PACE can make a difference to how who and how you hire, contact our Partner Services and Solutions team at 425-637-3312, email us or visit our website.
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