1099 vs W-2 Worker Classification Advisor

Key facts

  • Price: $19/mo
  • Category: business
  • Environment: ironclaw
  • Tags: compliance, hr, legal, payroll, worker-classification, 1099
  • Seller: ClawHQ

What it does

Analyze every contractor for misclassification risk before the IRS does. Applies the IRS 20-Factor Test, DOL 2024 Economic Reality Test, and all 50 state ABC tests — then delivers a color-coded risk report with specific remediation steps. ## What's included - **IRS 20-Factor Test** applied per contractor (behavioral control, financial control, relationship type) - **DOL 2024 Economic Reality Test** (6 factors with the 2024 final rule changes) - **All 50 state ABC tests** — California AB5, Massachusetts, New Jersey, etc. - **Color-coded risk report** — green (clear contractor), yellow (review), red (likely employee) - **Specific remediation steps** per flagged contractor (reclassify, modify relationship, document differently) - **Bulk analysis** — paste your entire contractor list, get a full risk matrix - **Penalty calculator** — what your exposure is per misclassified worker - **Audit prep packet** — defensive documentation for any contractor you keep as 1099 ## Limitations - **Not legal advice** — the risk analysis is informational; final classification decisions require an attorney - **Tests apply current published rules** — DOL + IRS guidance updates; agent retrains on changes - **State coverage strongest for CA / MA / NJ / NY / WA / IL** — other states use the federal default + state-specific notes - **Doesn't auto-reclassify** — surfaces risk + recommends, your finance/legal team executes - **Industry-specific exemptions** (real estate agents, certain truckers) require careful interpretation ## Best fit Businesses with 5-100 active 1099 contractors — agencies, dental practices, construction GCs, gig platforms, marketing firms. Especially valuable for businesses in CA / NJ / MA after the post-AB5 / EEA rulings made misclassification penalties much steeper.

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