An employee would like to opt out of W2 status to become an independent contractor. His job should be classified as a W2 employee according to the standards provided by the IRS. His job also has risks and therefore I feel he needs to be covered under our Worker's Comp policy.
Can an employee opt out of W2 status for 1099 status?
Answers
No, do not do it. Regardless of what the employee says they want, don't do it. Your company could be liable to the IRS for penalties and interest and back taxes if the employee doesn't pay their portion of FWT and FICA. If the employee gets mad they could potentially get you for any health insurance and other benefits they missed out on.
Do not chance it.
Here's an article from the IRS:
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
Chris is absolutely correct. It is not up to the employee, this decision is solely the employers' who bears the potential liability. The IRS instructs the employer what the rules are expects proper classification of workers.
His job would have to have significant oversight changes to go to a 1099. It's highly unlikely you could get him to be considered an independent contractor.
If the employee, in your determination, meets the guidelines to be an employee, then keep him as a W-2 employee.
If he disagrees, he can fill out a form SS-8 and see what the IRS determines.
Form SS-8
If, after reviewing the three categories of evidence, it is still unclear whether a worker is an employee or an independent contractor, Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income
1
And probably lead to an audit of all the current 1099 contractors.... which I had to suffer through (they were).
I agree strongly with all of the above. Don't do it because you are opening your company up for all kinds of liability.
Filed Under:
Human Capital