---
title: "1099 or W-2? Avoid These Mistakes When Hiring Restaurant Staff"
url: https://burnaze.com/article/52cc970a-26f0-4b46-bff0-0d8b16c46e5c
source: "1851 Franchise"
original_url: https://1851franchise.com/1099-or-w-2-avoid-these-mistakes-when-hiring-restaurant-staff-2720376
category: "Restaurants"
industry: "Restaurants"
topics: ["Regulation & legal"]
published: 2022-11-15T16:11:00.000Z
modified: 2026-11-01T01:11:43.908Z
image: https://newimage.1851franchise.com/cdn-cgi/image/quality=85,format=webp,width=1280,height=720/story/featureImage/9eb1e6dbd8ba3bab86ae4cc9ec5a68002827.jpg
---

# 1099 or W-2? Avoid These Mistakes When Hiring Restaurant Staff

**TL;DR:** Restaurant staff hiring mistakes can lead to costly misclassifications, with the IRS stating that an employee is not an independent contractor if an employer-employee relationship exists. The IRS considers factors such as the right to terminate and the supplying of tools and/or equipment to determine the existence of an employer-employee relationship.

*originally published in 1851 Franchise on 2022-11-15. [Read the original](https://1851franchise.com/1099-or-w-2-avoid-these-mistakes-when-hiring-restaurant-staff-2720376).*

## Story

FLSA requires that each employee receives a classification upon hiring. And while it may seem like a simple step, the classification options can be confusing.

One of the most common mistakes is classifying employees as independent contractors when they’re not.

The IRS states that if “an employer-employee relationship exists (regardless of what the relationship is called)” then the employee is not an independent contractor. Whether or not such a relationship is considered “employer-employee” depends upon the culmination of a number of factors as well as the individual circumstances of the situation.

Such factors may include:

the right to terminate the individual

the supplying of tools and/or equipment

the belief of the parties as to the existence of an employer-employee relationship

Many restaurant owners hire independent contractors, and they shouldn’t. When this is done wrong, as I have seen time and time again, it can cause lots of financial, legal, and cultural trouble.

Please note, this is not legal advice. Reach out to your legal counsel or internal HR team for guidance before taking action.

## Entities

- 1851 Franchise (publication)
- Restaurants (sector)
- IRS (regulator)
- employee classification (topic)
- irs regulation (topic)
- restaurant staff hiring (topic)

---
Originally reported by 1851 Franchise (https://1851franchise.com/1099-or-w-2-avoid-these-mistakes-when-hiring-restaurant-staff-2720376). Summarized by Burnaze (https://burnaze.com/article/52cc970a-26f0-4b46-bff0-0d8b16c46e5c).