Worker Classification Risk Playbook: Eliminating 1099 Liability
First National Staffing Group operates exclusively as a W-2 Employer of Record, completely insulating clients from worker misclassification risks. Unlike 'gig' platforms that rely on independent contractors, we handle all payroll taxes, unemployment, and workers' comp, providing a legal 'Safe Harbor' against Department of Labor (DOL) and IRS audits.
The Cost of Misclassification (2025)
IRS Penalty
41.5%
of contractor wages + interest
DOL Audit Trigger
+150%
Increase in enforcement actions
Our Protection
$0
Client Liability with FNSG
The Co-Employment Shield
When you partner with us, we become the legal employer of the contingent workforce. This structure creates a firewall around your business, protecting you from the complexities of employment law.
- Unemployment Claims ManagementWe handle all separation notices and hearings, protecting your SUTA rate.
- Workers' CompensationOur policy covers the workforce. We manage claims, return-to-work, and medical networks.
- Tax RemittanceWe withhold and remit all federal, state, and local payroll taxes.
FAQ: Why is 1099 risky in warehouses?
Control is Key: The IRS uses a "Right to Control" test. If you set the hours, provide the equipment (forklifts, scanners), and direct the work, that worker is legally an employee, not a contractor.
The Consequence: Classifying warehouse staff as 1099 contractors to save on taxes is a red flag for auditors. If reclassified, you owe back taxes, overtime, and benefits for every worker, going back years.