The Express Blog has a new series called the Basics of Benefits for U.S. leaders and job seekers.
When you’re in the market for a new role, understanding the difference between being a W-2 employee and a 1099 independent contractor is essential to ensuring you land the right job. Work-life balance is dependent upon choosing when and where to work. The right type of employment for you will vary based on your preferences and needs.
W-2 (Employee)
A W-2 employee is typically on their employer’s payroll, has taxes withheld from paychecks, and is eligible for benefits, legally required paid time off, and potentially, 401(k) retirement contributions. W-2 workers are also covered by state unemployment and workers’ compensation insurance.
1099 (Independent Contractor)
A 1099 independent contractor isn’t eligible for benefits, paid time off, or 401(k) contributions. Taxes are the contractor’s responsibility, and there’s no coverage for lost wages due to unemployment. Independent contractors have more flexibility but may sacrifice benefits and consistent pay. Working as an independent contractor can be ideal if you periodically need long periods off work, have skills ideal for freelancing, and have enough clients to sustain your financial needs.
The U.S. Internal Revenue Service (IRS) uses three categories of evidence to determine if workers are W-2 employees or 1099 contractors:
- Behavioral – Does the company have control over what the worker does or how they do the job?
- Financial – Are payments, reimbursements, and supplies managed by the payer?
- Relationship – Are contracts or benefits provided, and is the work key to the business?
If a worker’s status is still unclear, the worker or business can file a Form SS-8 with the IRS for an official ruling based on the facts and circumstances surrounding employment. This process can take at least six months.
Express Is a W-2 Staffing Agency
As a W-2 staffing agency, Express Employment Professionals’ employment experts are available to prepare you for the job and support you while you’re on assignment. Our associates on assignment enjoy all the benefits and security of being employed directly by an organization.
As a leading staffing company, Express placed 427,000 associates globally in 2024 and more than 11 million in our more than 40 years of business. If you’re interested in applying for a job through Express or working with a team of staffing experts in your industry, find the Express location nearest you or visit ExpressPros.com to learn more.
Check out previous posts from the Express Blog’s Basics of Benefits Series:
