A Handbook for 1099 Contractors – What Goes In and What Should Stay Out

If you employ independent contractors, you might consider developing a handbook with useful information for them.  If you’re thoughtful about how you approach this it can be a powerful tool, although there are some important caveats.  

The critical thing to understand is that independent contractors are just that: independent.  If you treat your contractors like employees (and the IRS agrees), you could be liable for all the benefits, protections and compensation that employees are entitled to.  Misclassification of employees can result in fines, penalties and IRS headaches.  If you’re unsure, refer to the IRS definition of a contractor.  Independent contractor relationships are best managed with a contract.

Additionally, don’t give your 1099 contractors a copy of your employee handbook, because you never want to muddy the line between contract and employee labor. It’s always a good idea to consult with an attorney to ensure you have correctly classified whether your workers are employees or independent contractors.

With that out of the way, it can be useful to provide guidance to your contractors about how your company operates, your mission and how they fit into that equation.  For this, a Contractor Standards Guide can be helpful.  Although similar to an employee handbook, a Contractor Standards Guide can serve as an abbreviated guide for your company policies and expectations for independent contractors.

Some items that CAN be incorporated into your 1099 independent contractor handbook include:

  • Your mission statement, vision for the company and how they fit in
  • Company specific information like where to park, how and when they can gain access to facilities, and when certain events usually occur
  • Details about your company culture and practices
  • Health and safety information
  • Smoking policy
  • Guiding principles
  • A reminder that independent contractors exercise independent control in how they approach and complete a project and that they are responsible for obtaining and using their own tools and equipment to complete their tasks.

Some items that SHOULD NOT be included in your contractor handbook include:

  • Information on benefits including paid holidays, vacation, probationary periods and insurance.
  • Independent contractors are not subject to minimum wages, overtime compensation, employee benefits or tax withholding, so don’t include this language.
  • Promises of future employment.  Contractors are not subject to unemployment compensation after job completion or termination, they are hired on a per-job basis with no promise of future work.
  • Independent contractors are not subject to workers’ compensation in the event of injury.
  • Dress code and disciplinary policies.
  • Pay periods not defined by contracts or through invoicing.
  • Attendance policies, time off and leave policies, performance reviews.

While independent contractors exercise a great deal more control over how they represent themselves and how they complete the project assigned them than W-2 employees, communicating your company’s integral message is great way to showcase your expectations while allowing your contractors to exercise independence.



Note: An Independent Contractor Handbook is provided with Comprehensive Handbook.

Your company is unique. Why shouldn’t your Employee Handbook be?

Many companies are retooling their Employee Handbooks to delight and inform their current, and often prospective, employees. Because Employee Handbooks are evolving to encompass company culture, your Handbook ought to jibe with your workplace feel.

A Handbook that is properly designed and executed will hone into your company’s ethics, emotions and logic. The new Employee Handbook is a company culture delivery wagon. These days, employees don’t mind reading the Handbook, in fact, they’ve started embracing it, as long as your Handbook includes one or more of the following:

Digital or interactive format
Visually Pleasing
Emotionally engaging
Anecdotal/ Personal
Narratively accessible

Handbooks are no longer intra-office paperweights taking up drawer space. Many Handbooks are being redubbed “Culture Books” and are no longer marketed to only current employees. Prospective employees can now access many Handbooks online and dial into the company culture before beginning the job application process.

Not just a list of company demands, your Handbook is also an inside look at what your company can offer its employees. Think beyond standard benefits packages. Perks are a great way to ramp up in your Handbook. A few sought-after company perks include:

A great Holiday Party
A softball/dodgeball team
Supportive of continuing education

Don’t overlook the look of your handbook. Many companies are passing on the binders, plastic presentation covers, and hole-punched or spiral-bound floppy copies of drabness, instead opting to have copies hardbound or otherwise aesthetically assembled.

Increasingly, employers such as Zappos, whose Culture Book has gone viral, have discovered that hiring an employee whose personality matches your company’s culture outside of work is obviously more likely to be a better fit than someone who wears one face on the job and another off the clock.

This mindset has led to an uptick in companies who use their Handbooks to cover more than legalese. In fact, some companies have begun to relegate legal liability documents to other sets of employee paperwork, freeing up the Handbook (or “Culture Book”) to inspire current employees while recruiting new ones.