W2 means the contractor is employed, by us or our employer of record, and we handle payroll, taxes, insurance and benefits. 1099 means the contractor is self employed and invoices for their time. For you, the difference is in cost, risk and who’s responsible for what.
On W2 the engineer is an employee of the staffing side. Payroll taxes, workers’ comp, liability insurance and any benefits sit with us, and the bill rate reflects that. The engineer gets a regular paycheck and, depending on the arrangement, health cover. Most engineers who contract full time prefer W2 for exactly those reasons, so the W2 pool is deeper, especially for longer engagements.
On 1099 the engineer runs their own business. They invoice, pay their own taxes and carry their own insurance. The bill rate is usually lower because the employer costs aren’t in it, but the engineer carries more risk and expects a higher rate to compensate, so the difference at the bill rate is smaller than people assume.
The risk on 1099 is misclassification. If a 1099 contractor is working set hours, under your direct supervision, on your equipment, for a long period, the IRS and most states can treat them as an employee, and the liability lands on whoever engaged them. Short, defined, project based work with a clear deliverable is where 1099 belongs. A two year site role with a desk and a badge is a W2 role.
In practice we recommend W2 for anything over a few months, for anything on site every day, and for any engineer who wants it. We recommend 1099 for short specialist work, for engineers who already run an established business, and where your procurement team is set up for it.
Either way, you see one bill rate, one weekly timesheet with a set window to approve or query, and one point of contact for the whole engagement. The onboarding, the paperwork and the last timesheet are ours.
