Client Risk Assessment Checklist

Use this during onboarding or before issuing any Form 1099-NEC.

🔍 Worker Classification Review

Ask your client:

Behavioral Control

• ☐ Do you set the worker’s schedule?
• ☐ Do you supervise or direct how the work is performed?
• ☐ Do you require the worker to follow company procedures?
• ☐ Do you provide training?

Financial Control

• ☐ Do you provide tools or equipment?
• ☐ Do you purchase materials?
• ☐ Do you reimburse expenses?
• ☐ Do you pay hourly or weekly?
• ☐ Is this their primary source of income?

Relationship of the Parties

• ☐ Is the work performed part of your core service?

Examples:

🚨 If YES → Likely Employee under NY Fair Play Act

Independence Test

• ☐ Does the worker advertise their services?
• ☐ Do they work for other companies?
• ☐ Do they have business insurance?
• ☐ Do they operate under a separate business name?
• ☐ Do they have their own tools?

📌 Risk Determination

⚖️ 2. 1099 vs W-2 Decision Tree (Construction Industry)

Step 1:

Is the worker performing work that is part of the company’s normal construction activity?

➡️ YES → Go to Step 2
➡️ NO → Possibly Independent Contractor

Step 2:

Does the company:

• Set the schedule?
• Supervise the work?
• Provide tools or materials?

➡️ YES to ANY → 🚨 Must be W-2 Employee under NY Fair Play Act

➡️ NO to ALL → Go to Step 3

Step 3:

Does the worker:

• Maintain a separate business location?
• Work for multiple companies?
• Advertise services publicly?
• Carry their own insurance?

➡️ YES to ALL → May qualify as Independent Contractor
➡️ NO to ANY → 🚨 Must be W-2

🛡️ 3. Misclassification Audit Defense Intake Form

Use this if client already issued 1099s and is being audited.

Company Information

• Legal Business Name:
• EIN:
• Industry:
• Years in Business:

Worker Information

• Worker Name:
• LLC or Sole Proprietor?
• EIN or SSN:
• Start Date:
• End Date:

Work Arrangement

• ☐ Written Contract Exists
• ☐ Worker Sets Own Schedule
• ☐ Worker Supplies Tools
• ☐ Worker Purchases Materials
• ☐ Worker Can Hire Assistants
• ☐ Worker Works for Other Companies
• ☐ Worker Has Liability Insurance
• ☐ Worker Advertises Services
• ☐ Worker Has Business Website

Payment Structure

• ☐ Paid by the job
• ☐ Paid hourly
• ☐ Paid weekly
• ☐ Paid upon project completion

Control Factors

• ☐ Company supervised work
• ☐ Company provided training
• ☐ Company required uniform
• ☐ Company dictated work method
• ☐ Worker required to report daily

Documentation Available

• ☐ Invoices
• ☐ Proof of Insurance
• ☐ Business Registration
• ☐ Marketing Materials
• ☐ Equipment Ownership Proof

Need Help?

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