A 1099 employee is an independent contractor, freelancer, or self-employed worker who completes specific jobs or assignments for a company, but they are not employees of the company. The term "1099 employee" is a misnomer, as the correct terms for such workers are independent contractor, non-payroll worker, or self-employed worker. The name comes from the IRS Form 1099 that contractors must complete to report their earnings. Unlike traditional employees, 1099 workers organize their own working hours, use their own tools to perform the work, and pay their own self-employment taxes. At tax time, instead of providing a W-2 for traditional employees to report pay, employers issue a 1099-NEC to independent contractors to whom they paid more than $600 over the course of the year. It is important to note that there are different classification systems to determine worker status, and a worker may be considered an employee under one set of rules and an independent contractor under the other.
In summary, a 1099 employee is an independent contractor who works for a company on a project or assignment basis, and they are not considered employees of the company. They are responsible for their own taxes and work independently, using their own tools and setting their own hours.
