How Recruiters Can Convince Candidates to be Paid on a W-2

by Debbie Fledderjohann on 02.20.2012

(Editor’s Note: This is the next in a series of guest blog posts about contract staffing, courtesy of Top Echelon Contracting, the recruiter’s back-office solution. Similar posts will appear in future issues of The Pinnacle Newsletter Blog.)

For various reasons, some workers prefer to be paid on 1099 instead of a W-2. But it’s not the worker’s decision. The IRS guidelines determine whether a worker is classified as a 1099 independent contractor or a W-2 employee.

Still, recruiters and their clients often get pushback when trying to convince their candidates that they need to be paid as a W-2 employee rather than a 1099 independent contractor. So how do you convince them that they need to be paid on W-2?

For starters, you may want to point out the risks. Independent Contractor misclassification audits have increased on both the federal and state levels over the past few years. There has been a lot of focus on how this affects companies, but workers can also be subject to audits. If it’s found they’ve been misclassified, they could be required to file amended tax returns, which could result in additional taxes and penalties.

Plus, there are many advantages to being classified as a W-2 employee. By being a W-2 employee, workers will:

Receive a weekly paycheck with the option of direct deposit
Have access to medical insurance, vision, dental, and life insurance
Have access to a 401(k) plan
Be eligible for unemployment insurance
Be covered under the employer’s Workers’ Compensation plan
Not have to negotiate and/or write a client contract
Not have to generate invoices to the client
Not have to handle collection issues with the client
Not have to float expenses while waiting on payment from the client
Not have to do their own quarterly tax filings
Have half of the Social Security Tax paid by the employer
Have half of the Medicare Tax paid by the employer

By pointing out the risks of being classified as an independent contractor and the advantages of being paid on a W-2, you can convince even the most reluctant candidate that being properly classified is in their best interest.