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Can an employer switch me from payroll to 1099 back and forth at will?

Wilmington, NC |
Attorney answers 3


Not without placing the independent contractor designation in serious jeopardy. The employer would never resort to such transparent shenanigans if it had any idea of the legal exposure it was inviting. One of the 15-20 legal criteria that will be examined to determine if an alleged I.C. is really an employee, is whether the type of work the individual performs is normally performed by employees. From your employer's yo-yo fetish, the question can be answered as follows, "Yes. Not only is it performed by employees, it is performed by this employee!" Ding, Ding, You lose Mr. Employer. Since this would likely result in the individual being found to be an employee, the employer is immediately on the defensive when asked to explain why it has no workers' compensation insurance for the employee, has not paid overtime for all hours over 40 in a week (and over eight in a day in California), and why withholding requirements were not complied with, for example. The employer's likely answer: "Because I thought he was an independent contractor." Rebuttal: "Then why did you treat him as an employee half the time, when it served your purposes to do so? " This employer has no justification to offer other than its own shameless opportunism.


I agree with the other attorney that the employer is setting itself up to an argument that you are not an independent contractor at all. I edited the practice area for this question to include tax. I believe that there is a tax law or regulation that specifically addresses this practice. However, I am not a tax attorney and would defer to someone with that expertise.

Kirk J. Angel is an experienced North Carolina licensed attorney who focuses his practice on employment law. Mr. Angel, who has focused on employment law for more than 15 years, represents clients throughout North Carolina and more information about him is available at This response is for general informational purposes and does not constitute legal advice. Additionally, this response does not create an attorney client relationship. If you need legal advice, please contact a lawyer in your state who practices in the appropriate area.


The short answer is no. As the other attorneys have said, your employer is setting him/herself up for a world of trouble. Unfortunately, your employer is also hurting you and the IRS or the state tax agency might come after you first to find out why you keep getting these different forms each year. So long as you've properly filed your taxes each year and paid the self-employment tax for the years in which you got a 1099 instead of a W2, you should be able to avoid any penalties or additional tax assessments if you're examined; however, it could be a painful, and potentially costly, process.

If you're in the position to discuss delicate tax matters with your employer, you might suggest that you're not sure he or she is using the correct tax status for you and suggest that he or she consult with competent tax counsel before continuing to switch you back and forth. Otherwise, about the only practical solution is to find a new employer and to disclose to the IRS and the state tax agency what's going on so you don't end up getting examined yourself.

Good luck.

My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dana@nytaxcounsel or visit my website at

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