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1099 Contractors versus W2 Employees
The 1099 form and the W2 are two types of tax forms. The form you should fill out depends on the type of employee you are – contract or full time. A New Jersey employment law attorney can help you understand which form is right for your specific circumstance.
The W2 tax form is for full time employees. It automatically deducts payroll taxes from the paycheck and sends them directly to the government through your employer. W2 employees typically receive benefits such as health care packages, pension plans, unemployment insurance, and paid time off.
The 1099 form is for independent contracts or freelance workers. Contract workers are responsible for their own payroll taxes. They are also responsible for their own health care.
Employers may have financial benefits to hiring more contract employees instead of full-time staff. They are not required to provide benefits for contractors, and many contractors work off site and provide their own equipment. In general, you are a contractor if you have direct and total control over how your work is accomplished.
Have I been misclassified as an independent contract?
Problems arise when employers take advantage of their employees and misclassify them as contractors to avoid providing expensive benefits for them, when in fact they are working as full-time employees. If you are an independent contractor, you might:
- Be denied workers’ compensation benefits
- Lose the ability to file an employment discrimination lawsuit,
- Forfeit your right to unemployment insurance
- Lose out on overtime pay
- Have no right to family and medical leave
If your boss determines such aspects of your employment as how you perform your job, what hours you work, what location you work in, what equipment you use, and more.
If you are unsure of your status or feel that your employer is taking advantage of you, contact a knowledgeable New Jersey employment law attorney at Aiello, Harris, Abate, Law Group PC online or at (908) 561-5577.
