Q: How do I convince candidates who have always been 1099 independent contractors (IC) that they need to be paid as W-2 employees?
A: From a broad perspective, you can let the candidates know that the IRS is drastically increasing its evaluation of worker classification and there are more initiatives tied to recouping lost tax revenue from workers than ever before. If the contractor is audited by the IRS and they were incorrectly classified as a 1099 IC, they may have to amend tax returns to correct the way the income was reported, and they likely will not escape additional taxes, as well as penalties.
From a personal level, there are many “positives” that you can market to candidates so they understand the advantages of being a W-2 employee of a staffing firm when they accept their next contract assignment. Some examples of these are listed below:
- You will receive a weekly paycheck.
- You will have your paycheck direct deposited.
- You will have access to medical insurance.
- You will have access to vision, dental, and life insurance.
- You will have access to a 401(k) plan.
- You will be eligible for unemployment insurance.
- You will be covered under Workers’ Compensation.
- You will not have to negotiate and/or write a client contract.
- You will not have to generate invoices to the client.
- You will not have to handle collection issues with the client.
- You will not have to float expenses while waiting on payment from the client.
- You will not have to do your own quarterly tax filings.
- Your employer will pay half of your Social Security Tax (6.2%).
- Your employer will pay half of your Medicare Tax (1.45%).
Note: 1099 IC are responsible for paying all of the SS and Medicare taxes (15.3%).