W-2 vs. 1099 healthcare work

Why it matters to you

• Taxes. As an employee, your employer withholds income tax and your share of Social Security and Medicare, and pays its own share. As an independent contractor, you generally pay self-employment tax of 15.3% (12.4% Social Security plus 2.9% Medicare) and make estimated tax payments four times a year.
• Minimum wage and overtime. The federal Fair Labor Standards Act (FLSA) protects employees. The U.S. Department of Labor says independent contractors are in business for themselves and aren't covered by it.
• State programs. Unemployment insurance, workers' compensation and state wage-payment laws each have their own rules on who is covered. Texas, for example, says its Payday Law applies only to employees.

How the federal government decides

The IRS (taxes)

The IRS looks at the whole relationship, grouped into three areas:

1. Behavioral control: does the business control, or have the right to control, what you do and how you do it?
2. Financial control: does the business control the financial side of the job, such as how you're paid and who provides supplies and tools?
3. Relationship: are there written contracts or employee-type benefits such as insurance, a pension plan or vacation pay?

No single factor decides it. If you're not sure, you or the business can ask the IRS for a ruling on Form SS-8. The IRS says a determination can take at least six months.

The U.S. Department of Labor (minimum wage and overtime)

The Department of Labor uses an "economic reality" analysis: are you economically dependent on the business, or in business for yourself? Its rule on this is changing:

• A 2024 rule set out six factors and is still in the federal regulations.
• On May 1, 2025, the Department told its investigators to stop applying the 2024 rule in enforcement and to use its older guidance instead.
• On February 27, 2026, it proposed replacing the 2024 rule. As of October 1, 2026 no final rule has been published.

Check the Department of Labor's rulemaking page for the latest status.

Every state has its own rules

States decide classification for their own laws, and many use different tests for different purposes: unpaid wages, unemployment insurance and workers' compensation can each have their own test and their own agency. You could count as an employee under one law and a contractor under another.

One thing states agree on: what you're called doesn't decide it. Florida says how the worker is treated, not a written contract or a Form 1099, determines employee status. Georgia and Alabama say the same about labels like "independent contractor."

Here's what the states SHIFTit covers in depth say, from their own agencies.

California

• California uses the ABC test (Labor Code §2775, from AB 5) for its wage laws, unemployment insurance and wage orders. You're an employee unless the hiring business proves all three: (A) you're free from its control, (B) the work is outside its usual course of business, and (C) you're customarily in an independently established trade or business of that kind.
• A few occupations are exempt from the ABC test and use an older test. The state lists them on its employment status pages.
• Ask or report: the Labor Commissioner's Office for wages; the Employment Development Department (EDD) for unemployment and payroll tax status.

Nevada

• For Nevada's wage laws, NRS 608.0155 says a person is presumed to be an independent contractor only if specific conditions are all met, including holding the required licenses and insurance and meeting at least three of five independence criteria (such as control over how and when the work is done and freedom to work for others). Not meeting them doesn't automatically make someone an employee.
• Unemployment insurance (DETR's Employment Security Division) and workers' compensation (Division of Industrial Relations) use their own tests.
• Ask or report: the Office of the Labor Commissioner for wages; DETR for unemployment.

Georgia

• For unemployment, the Georgia Department of Labor treats a worker as an employee unless the business shows the worker is free from its control and customarily runs an independent business, or the IRS has ruled on Form SS-8 that the worker isn't an employee.
• Directly relevant to licensed healthcare workers: Georgia says simply holding a professional license isn't enough. The person must actually provide the licensed services to clients or patients other than the business.
• Ask or report: the Georgia Department of Labor for unemployment status. For federal minimum wage and overtime, Georgia points workers to the U.S. Department of Labor.

South Carolina

• For unemployment, the Department of Employment and Workforce (DEW) uses the common-law right-to-control test, looking at control of the work, who furnishes equipment, how you're paid, and whether either side can end the relationship.
• DEW says a contract calling the relationship "independent contractor" doesn't bind its decision.
• Ask or report: DEW for unemployment status; the Department of Labor, Licensing and Regulation (LLR) for unpaid wages.

Alabama

• For unemployment, the Alabama Department of Workforce uses a right-of-control test built on common-law factors. If the business has the right to control the worker, whether or not it uses that right, the worker is an employee.
• Ask or report: the Alabama Department of Workforce.

Florida

• For reemployment (unemployment) tax, the Florida Department of Revenue applies the common-law rules. Florida says intentional misclassification of a worker is a felony.
• Workers' compensation uses a separate test in Florida law, handled by the Division of Workers' Compensation.
• Ask or report: the Florida Department of Revenue for reemployment tax status.

Texas

• The Texas Workforce Commission (TWC) uses a 20-point direction-and-control guide. What matters is whether the business has the right to direct and control the work, even if it doesn't use it.
• Texas has a separate unemployment-tax rule for some app-based marketplace platforms, with a list of conditions that must all be met.
• Workers' compensation uses its own definition, handled by the Texas Department of Insurance.
• Ask or report: TWC, which handles both wage claims and worker misclassification reports.

Every other state

Your state's labor department and its unemployment insurance agency are the places to ask. The U.S. Department of Labor keeps a list of every state's labor office, and its unemployment insurance page links to each state's program. We're adding state-by-state detail as we expand the Lounge.

If you think you've been misclassified

1. Ask the business in writing how it classifies you and why.
2. Taxes: you can ask the IRS for a determination on Form SS-8. If you were an employee treated as a contractor, the IRS explains how to report your share of Social Security and Medicare on Form 8919.
3. Wages and overtime: you can file a confidential complaint with the U.S. Department of Labor's Wage and Hour Division at 1-866-487-9243. Federal law says employers can't retaliate against you for filing.
4. State rights: contact your state's labor or unemployment agency (above).

For advice about your own situation, talk to a tax professional or an employment attorney.

Questions to ask before you accept work

1. Will I be paid on a W-2 or a 1099?
2. Who sets my schedule, and who tells me how to do the work?
3. Who carries workers' compensation and liability coverage?
4. When and how am I paid, and are taxes withheld?

How SHIFTit pays SHIFTerz

It depends on the state. In California, every SHIFTer is a W-2 employee, with SHIFTit as the employer of record on every shift. In other states it differs, and you'll know which applies before you accept a shift. See how SHIFTit works for professionals.