Most business owners, and employees for that matter, don’t know or understand the difference between a W-2 employee and a 1099 subcontractor. In the world of experiential staffing, it is important to know the differences, as most brand ambassadors are one or the other. And based on IRS guidelines, brands are wise to always use and partner with agencies that use W-2 event staff.
There are some easy guidelines you can ask yourself to help you tell the difference. Does this employee need to show up at a specific time, does the employee have a specific dress code they are required to wear, does the employee need instructions day to day on the tasks they need to accomplish? If the answer to any of these questions is yes, then this employee is a W2 employee.
Conversely, if an employee makes his own hours, comes and goes as he pleases and knows the tasks he needs to accomplish and sets his own schedule, he is an independent contractor.
It’s great to be an employee! Why you ask? Employers are required provide workers compensation insurance in case you are injured on the job. If you are an independent contractor you must carry your own workers comp and health insurance and the bear the burden of these expenses as well.
As an employee, your employer will also deduct the proper taxes, Medicare and Social Security owed to certain government agencies from your paycheck as required by law. If you’re an independent contractor you must pay these yourself quarterly; hope you’re good at saving for this!
Sometimes employers who comply with all the rules, regulations and lawfully provide insurance benefits are at a disadvantage to other employers who cut corners in order to save money. This not only hurts the economy but could hurt their employees as well. Not every employer is in compliance with federal labor standards, rates and responsibilities. They also usually skimp on federal and state job protections for employees. Workers can often be misclassified and underpaid only to the benefit of unscrupulous employers.
Clients who use 1099 vendors don’t realize that cheap labor comes at a detriment to employees and maybe even themselves in the long run. They wouldn’t be happy to find out the vendor didn’t have the insurance required to cover a loss which they may end up paying for. Cheaper is not usually better and could come at a great cost.
Hiring W-2 event staff and making sure vendors use properly classified employees ensures compliant events and happy teams.
Elevate is one of a few select agencies that deliver experiential staffing solutions and hire W-2 event staff over exclusively to protect our clients. If you would like to partner with us, please feel free to reach out!