The difference between being a W-2 employee and a 1099 independent contractor (IC) is associated with how you are paid in conjunction with taxes and benefits. W-2 and 1099 refer to the tax reporting documents you receive from your employer at the end of the year depending on which you are.

Financially speaking, the most important distinctions being a 1099 IC versus a W-2 employee is that as a 1099 IC you will be responsible for paying both the employee and employers portion of payroll taxes (FUTA, SUTA and FICA). When employed as a W-2, your employer pays half of these expenses on your behalf.

If you are classified as an IC, you are paid as a 1099. In this case, the employer does NOT pay the employer share of FUTA, SUTA, or FICA (Social Security and Medicare) taxes. They are also not withholding federal income tax, state and local income tax, or FICA taxes from your paycheck. This may save an employer some money, but it puts you on the hook for calculating and paying your own income taxes and you will have to pay both the employee AND employer portions of FICA. If the employer is paying you on a 1099, you should not have access to the employers professional liability insurance, unemployment insurance, Workers’ Compensation, company materials or trainings and benefits like health, vision, dental, life insurance or a company's 401(k) plan participation.

This is a common misunderstanding and often misleading. Being employed as a 1099 independent contractor can have it's benefits, but the government isn't in the business of making any less from taxes produced by work being completed whether you are employed as a 1099 or W2. Someone has to pay the taxes.

You may hear "I make more as a 1099". That could be possible but it fully depends on your specific situation and is commonly said wihthout the details surrounding the statement. The common thinking is that if I "Ask" to be a 1099 I can get a higher compensation because the employer is not paying for benefits and taxes. However, you have to look at your specific situation and determine if the increase in compensation from an employer is more than your cost of paying your taxes and benefits you need in your specific situation. It's just not an apples to apples comparison from person to person or from a W2 classification versus a 1099 classification.

To fully determine if a 1099 position makes sense for you look at it like any other financial or business decision you would make otherwise. Compare your salary/hourly income, less taxes, benefits, materials, professional insurances, training and any other costs associated with one type of employment vs the other specific to your situation.

Very often you will find that they end up being VERY similar if not the same with one very important difference. As a 1099, the liability of treatment and taxes is 100% yours and your alone.

Of course we are biased about this topic because Therapy Care ONLY employs W2 classified employees. We are also owned by a speech therapist who also happens to be an attorney. So, we follow the law very carefully and we do NOT mix W2 and 1099 classified employees doing the exact same work. In our opinion, this is not something to walk the thin line on. It's something we believe we stay away from and focus on being a fair employer who offers professional opportunities and development where you can feel comfortable knowing we will always have your back.

Not you, not me, not Therapy Care or any employer for that matter. Technically, its the Government - both state and federal and the laws around describing employment. Employment classifications are determined by the definitions and laws related to employment and 1099 / W2 classifications. Further, the government (state and federal) offers employers guidance and tests to determine whether an employee SHOULD be considered one versus the other.

Don't take it from us here at Therapy Care, read it for yourself from the Government.

https://www.dol.gov/agencies/whd/flsa/misclassification

Or read about the misunderstandings about whether you should be a 1099 indepedent contractor versus a W2 employee.

https://www.dol.gov/agencies/whd/flsa/misclassification/myths

Here's information from the State of Illinois' Department of Labor

https://www2.illinois.gov/idol/Employees/Pages/Employer-Misclassification-of-Workers.aspx

No all employers are created equal. Not all employers understand and/or apply the State/Federal laws equally. Not all employers have been in business as long as we have and have an outstanding reputation of being fair, honest and transparent in how we do business and treat our employees.

Other employers who choose to mix these types of classified employees in their business risk significant fines from the Federal and State governments if they are found to be in violation knowingly or unknowingly of the labor laws.