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1099 workers vs W-2 employees: What’s the difference?

1099 workers vs W-2 employees: What’s the difference?

Update: 2025-10-06
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Employers sometimes refer to independent contractors as "1099" workers and employees as "W-2" workers after the IRS forms used to report income for these types of workers. What’s the difference between an independent contractor and an employee? Listen in as we cover:



  • [00:59 ] Differences between independent contractors and employees

  • [02:12 ] Does providing a 1099 dictate classification?

  • [03:03 ] Federal tests for independent contractors

  • [05:28 ] State tests for independent contractors

  • [06:45 ] Does a written contract dictate classification?

  • [07:08 ] Bringing back laid-off employees as independent contractors?


This content is based on generally accepted HR practices, is advisory in nature, and does not constitute legal advice or other professional services. ADP does not warrant or guarantee the accuracy, reliability, and completeness of the content. Employers are encouraged to consult with legal counsel for advice regarding their organization's compliance with applicable laws. This content is current as of the published date. 


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1099 workers vs W-2 employees: What’s the difference?

1099 workers vs W-2 employees: What’s the difference?

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