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All Collections » For Businesses » Compliance » What’s the difference between a 1099 independent contractor and a W-2 employee?

What’s the difference between a 1099 independent contractor and a W-2 employee?

The main difference between W-2 workers and 1099 workers is their employment status and how they are paid. W-2 employees receive regular paychecks and have taxes withheld from their pay, while 1099 workers are independent contractors who are responsible for paying their own taxes and receive payment based on a contract or project basis. According to the National Employment Law Project, anywhere from 10–30% of employers misclassify their employees as independent contractors, which can result in worker misclassification lawsuits. For further information on worker classification, visit the IRS website. Additional information is also available from the U.S. Department of Labor.