In Construction, hiring Independent Contractors can get very expensive, very fast!
The Internal Revenue has a defined set of rules on what is the difference between an "Independent Contractor" and "Employee". With all the documentation in place, a person could still be classified in the eyes of the Internal Revenue Service as an "Employee."
When you hire 1099 contractors
You need to know that their state contractor's license, bond, and insurance are active. During audits, state agencies are now looking to check the bond and insurance. Anytime a contractor's license is suspended, the State may reclassify that person as an employee on your job.
Because all fifty states are working with other agencies looking to be sure employee rights are covered, and the state, local and federal payroll taxes are paid. As an employer among your responsibilities are these:
Pay workers’ compensation
Meet wage and hour requirements
Pay unemployment tax
Maintain a safe workplace