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1099 Independent Contractors to W-2 Employees: Part III

Our final consideration on the topic of converting contractors to employees is:  How do you communicate the conversion to the worker and what extra precautions can you take to protect the business? To communicate the conversion, it's best to notify the contractor in writing, citing the business need necessitating conversion to an employee. Additionally, it is in this written notice that you will want to outline the next steps, and what documentation you will need from them to process them in your payroll manager - i.e., documents like a I-9 and the associated identification cards, and a W-4. To protect your business, it might be in your best interest to consider having them sign a noncompete, nonsolicit, confidentiality agreement, and/or nondisclosure. You may also decide to have them sign an employee agreement if you want to associate a term with their employment, versus leaving them at-will. Lastly, make sure they get all the standard new hire documents, like the employee
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1099 Independent Contractors to W-2 Employees: Part II

A few weeks ago we discussed classifications of contractors versus employees. Now let's jump right into looking at what benefits W-2 employees have that contractors don't and how do you structure the "new" hire's compensation and benefits. It's no secret that W-2 employees are eligible for a wide variety of benefits that contractors are not, but what are those specifically? Some include: Overtime Vacation time or paid time off ("PTO") Meal breaks Withheld income and payroll taxes Workers' compensation Unemployment benefits Family and Medical Leave Act ("FMLA") 401(k) contributions Wanting to compete in a competitive marketplace for quality employees, you will need to structure your benefits to appeal to those folks. Consider things such as: Marketplace base salary Eligibility for salary increases Eligibility for promotions Cross training opportunities Annual bonuses Commissions Profit sharing

1099 Independent Contractors to W-2 Employees: Part I

Changing your business from employing independent contractors to employees could be quite the undertaking, but one that is well worth it to ensure you are legally compliant and not misclassifying workers, an issue for many small businesses. What will that conversion entail? How can it be done to best protect you and your business? In a three-part blog series, we are going to talk you through the following: How do you know how the worker should be classified? What are the benefits W-2 employees have that contractors don't and how do you structure the "new" hire's compensation and benefits? How do you communicate the conversion to the worker and what extra precautions can you take to protect the business? Let's get started today with #1: How do you know how the worker should be classified? First, ensure you are making the switch for the right reasons. The IRS tells us "[i]n determining whether the person providing service is an employee or an