1099 Contractor vs Employee
Victor was working as a 1099 contractor on a large-scale engineering project when his client said he must attend an HR training workshop given to all the client’s employees.
I advised against it. Why? The contract didn’t require it and doing so would raise questions about the overall relationship.
Contractors don’t get employee benefits and are not involved in running the business, so they should not be treated as employees. Otherwise, there’s a risk of establishing an employee relationship which creates both legal and tax obligations.
The question of whether a worker is an independent contractor or an employee is a legal determination about the relationship itself. It's irrelevant that the contract may call a person an independent contractor. The issue is decided by the facts and circumstances of the relationship itself, not by the contract.
The IRS provides guidance for determining whether a worker should be classified as an employee or independent contractor, and that's a great starting point to get to the determination.
Once workers are properly classified as independent contractors, the IRS guidelines should be strictly adhered to. To preserve an independent contractor relationship it's important to treat workers as independent contractors and not employees.