1099 Independent Contractors to W-2 Employees: Part III

1099 Independent Contractors to W-2 Employees: Part III

Our final consideration on the topic of converting contractors to employees is:  How do you communicate the conversion to the worker and what extra precautions can you take to protect the business?

To communicate the conversion, it’s best to notify the contractor in writing, citing the business need necessitating conversion to an employee. Additionally, it is in this written notice that you will want to outline the next steps, and what documentation you will need from them to process them in your payroll manager - i.e., documents like a I-9 and the associated identification cards, and a W-4.

To protect your business, it might be in your best interest to consider having them sign a noncompete, nonsolicit, confidentiality agreement, and/or nondisclosure. You may also decide to have them sign an employee agreement if you want to associate a term with their employment, versus leaving them at-will. Lastly, make sure they get all the standard new hire documents, like the employee handbook as that would now apply to them as well.

With all these steps in place, and protections, you will be well on your way to growing your business and your number of employees.