Survey Results: Employee vs. Independent Contractor

Today we’re releasing the results of our latest survey, “Employee vs. Independent Contractor.” The feedback we’ve gathered from both business owners and hired workers demonstrates a greater need for education on employment laws surrounding the use of 1099 contractors.

This series of questions focused on the HR hot-topic of when to hire W2 employees and 1099 contractors, the legal rules defining each worker type, and views on the employment statuses from workers themselves. The survey was one of our most popular to-date; comprised of 85% employees/independent contractors and 15% business owners. Of those surveyed a majority came from retail and sales professions along with education, however the data collected spans views from IT, accounting, hospitality, healthcare and others.

W2 vs. 1099: The Findings

From a business owner/hiring manager perspective, hiring independent contractors makes sense. Two thirds of those surveyed had hired 1099 workers instead of W2 employees in the past. While most employers gave their independent contractors short and defined jobs, 25% of respondents created open-ended jobs for independent contractors – a practice that could result in potential misclassification issues. Another misclassification red flag is the practice of providing 1099 workers with tools and equipment. Over half of those surveyed had 1099ers bring their own equipment but a few still gave workers everything they needed to get the job done.

From a worker perspective, 87% of those surveyed have worked as a 1099 at some point in their career. Contrary to the business owners’ responses, these 1099 workers claim that the majority of the time (70%) their jobs were open ended employment verses short and defined projects. While working as independent contractors 70% reported feeling as if they missed out on regular employment benefits because of their status.

At no time should workers be hired as independent contractors only as a way to save costs on insurance, health care, payroll taxes or other expenses. It is important for business owners and hiring managers to familiarize themselves with labor laws so as not to incorrectly hire W2 and 1099 employees. To learn more, read our past blog post on independent contractor misclassification.

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