Hiring legitimate contractors who have thier own biz to do clean-up work is NOT a 1099 scam drama queen Iceman, no different than my customers that hire us regularly as we have our own biz......................Hmm.....This is great I just love this....Ok...so there is really no way to know for sure if Barbara is or is not abusing the system....And that is why I say the system does not work as it is....Maybe she is not using the 1099 setup to cheat the system and get workers without having to provide things like insurance or Social Security, or Workmans Compensation...Maybe...I have my doubts...but let us assume she is Actually hiring legitimate companies that are paying their employees as they should....but Probably not...and I don't mean to say she is doing anything illegal...no...just morally questionable...if she is...and we do not know...all we have is her word...and she may not actually know the answer herself...it is easier to handle as a boss if you just don't ask...and therefore do not know....it is not your responsibiity anyway, so why ask?....She mentioned that some of her "employees" have started their own businesses and she hires them occassionally...or has hired them whatever...so you see it goes kinda like this...one day Ahmid is employee...Employer pays SS, Workmans comp, and part of taxes...Let us say Ahmid makes 8/hr...this means Employer pays about 15/hr for that employee after paying the taxes and so forth....now Ahmid quits and goes to work for himself as Ahmid DBA Ahmids Cleanup Company....As a self-employed person He can set his own rates for his services and the customer pays him....the customer does not take out taxes, or provide insurance etc...it is up to Ahmid to do that...so what happens here...Well what I have seen is that Ahmid goes into business for himself and here is what he does...He understands that it cost Barbara 15/hr for him to work for her and he is only taking home a little less than 8/hr...so he goes into business for himself and charges Barbara 12/hr...She no longer has to pay any of the other costs and is in no way responsible for those payments...It is up to Ahmid...At the end of year Barbara gives Ahmid a copy of the His 1099 form reporting how much she paid him for the year...or telling him the amount she told the IRS he has to pay taxes on....of course Ahmid should have been paying quarterly payments on his income tax, but Ahmid has a family and needs every penny he can get....so when he gets the 12/hour from Barbara he uses it all to live on...Housing, car, tools , etc...there is nothing left for the Taxes much less for things he was receiving from Barbara like Workmans Compensation, (not required to have for yourself or family) Social Security, and maybe health insurance....Now is this Barbara fault?....No...But it is morally questionable because people that do participate in this setup help to drive prices and wages down...It is a sort of loophole...it makes easier and cheaper for people like Barbara...and it is not illegal...See it is as she said...in this cleanup area she does not have enough work to justify a regular employee...she does not have work for them everyday....with contract labor you do not have to offer anything but work, when you have it...the contractor does not have any assurance that there will be work tommorow...but usually they get enough work they are still available when you need them...Often they are working full time just like an employee...While not illegal it is morally questionable....What should she do?...