We get asked this question regularly from companies of all shapes and sizes: what’s the difference
between a freelancer (or contract worker) and the 1099ers that makes up some of their workforce.
Let’s see if this can translate into a fairly succinct read. Both groups—freelancers and 1099ers receive
1099 statements from employers to satisfy the nice folks at the IRS. And most similarities stop there.

The “contract” work model is time tested. A 1099 contract worker has a title such as web designer,
programmer, graphic artist, administrator or editor, and earns a living using his or her skills on an hourly
or project basis. Some leverage new online companies (Solvate, Elance and oDesk being great examples)
to market skills. After mastering a specific skill set, they might reclassify themselves as a consultant, join
up with 2 or 3 colleagues or friends and create a consulting company. It’s a well-proven model.
Employers understand the model and leverage it routinely. Contract workers usually have defined hours
or a project timeline to define their relationship.

Another form of 1099 employment is the on-demand model. Short term assignments that are usually
less defined in terms of consistency. Jim, your next assignment is to go to Acme Company and install
network software for their new router. Next week we start work with Fried Chicken Chain to replace
the signage in each of their Illinois franchise restaurants. You will join the team on Wednesday at the
Convention Center to get trained as a conference greeting host which is scheduled for Thursday and
Friday.

Lastly there is a higher order 1099 phenomena currently under the radar but has emerged quickly. It
involves more senior individuals, typically finished with corporate life and recognizing that there is life
after 50, but not entirely ready to leave the work force. They aren’t looking for full-time work, rather are
opting for a better-suited, more interesting work environment. Most no longer have an absolute need
for a bi-monthly paycheck and look for a trade-off. They are okay with token compensation since they
aren’t working to earn a living like a freelancer or the on-demand model. Usually big expenses such as
college tuition and mortgages are in the rear view mirror, and mid-life “toys” or vacation homes have
been addressed.

Senior professionals serve as advisors, temporary role players and rainmakers managing the most
complicated aspects of a business. They can both jump start young firms and provide a
low-cost/high-value shorter term resource to mature firms. No benefits, part-time pay, flexible
commitments, success based/minimum retainer compensation all add up to people and skill set access
that a few years ago would have been unaffordable and unavailable to companies.

Whether leveraging a 1099 professionals for short term project assignments, building a variable labor
force capability for spot 1099 work, or leveraging a more seasoned/experienced 1099er for a strategic
role, the employment picture in the U.S. is quickly evolving. Companies need a 1099 strategy to remain
competitive—it’s just good business. The problem is most firms have not thought about how to
implement these tools, understand where or how to use them, or have people experienced in
implementing them. Aligning with a partner to appreciate and work through this employment strategy
will serve your company in many ways.

By Cindy Lubitz of inTalent Consulting Group and Peter Kestenbaum of 1099 Partners