Hey guys,
Having an issue with one of my drivers. They keep asking me to 1099 them so they can do more write offs. They used to DoorDash and Uber a lot and just basically wrote everything off. But we w2 them. They don’t have any duty’s in the store other than just doing delivery. But I was under the assumption as because they get shift pay plus delivery fee and tips from us they are our employees so we have to w2 them. Also if anything where to happen to them in our store our insurance covers it. Where as if they were 1099 it would not. Anyone have a solid answer to this?
Don’t have a solid answer but believe you are correct.
From my understanding to be 1099, they would get paid per delivery and not shift pay. They also have to be able to not be on a schedule, and work hours they want. your insurance under workers comp would not cover them.
Matt
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From an IRS perspective, deciding if an individual/driver is going to be W2 or 1099 is something that is determined at time of hire. We have seen clients who have had delivery drivers as W2 and 1099. W2 vs 1099 really comes down to a matter of control, not pay type or structure (https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee). What I mean by control is that for a W2, employers will set employee hours, employers will provide resources (such as the vehicle and equipment), are drivers responsible for following the same company guidelines as other employees, etc… With a 1099, the independent contractor sets their hours, they provide the vehicle and resources, and do not have to follow employee regulations or policies. With all of this being said, there is some discretion about whether a driver would be a W2 or 1099 and employers should weigh the facts and circumstances outlined by the IRS. From an employer standpoint, having a driver as a 1099 would be more beneficial since the employer would not be responsible for paying their payroll taxes (1099 contractors would be responsible for this when they file their taxes). This can save your business ~10% on payroll costs for the specific employee(s). 1099 pay can still follow pay types similar to shift pay as long as it’s outlined in their contractor agreement. Ie - we will pay X driver $10 bonus for pay after 9 PM.