Employers Opt for Staffing Agencies

Without question the number of workers choosing to be "independents" is growing by the day. They want the opportunity to advance their skills and experience within their industry, but don't want the politics and pressures that come with being full-time corporate employees. Employers are sometimes skeptical, however, about entering into job agreements with independent workers.

The IRS is rigid about the tax treatment of these employees. The IRS feels that income earned by the 1099 worker goes largely under-reported, therefore their tax contribution would be lower. In addition, they feel that a good number of employees do not fit the 1099 Independent Contractor criteria of being under minimal financial and behavioral control of the employer.

If the IRS suspects that all the criteria are not being met, both the employer and employee are then subject to being audited. If, in fact, there has been any impropriety, taxes and fines are levied on both parties.

With this potential liability looming with 1099 contractors, many companies are opting to go through staffing agencies. In this way, all taxation, insurance issues, etc. are taken care of for the employee by the staffing service, thus removing the element of "1099 risk" for both the worker and the employer.