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:
| Company Type | Worker Role |
|---|---|
| Roofing Company | Roofer |
| Framing Company | Framer |
| Painting Company | Painter |
| Electrical Contractor | Electrician |
🚨 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
| Score | Risk Level |
|---|---|
| 0–3 YES | Low Risk |
| 4–6 YES | Moderate Risk |
| 7+ YES | 🚨 HIGH RISK |
⚖️ 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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