W2 Employee, 1099 Contractor, or Legal Liability?

W2 Employee, 1099 Contractor, or Legal Liability?

July 17, 2026 ยท 21 min

About this episode

This episode discusses the implications of classifying workers as independent contractors versus employees for nonprofits.

Classifying a worker as an independent contractor instead of an employee might seem like a simple administrative choice, but getting it wrong can expose a nonprofit to back taxes, penalties, and legal liability. In this episode, we sit down with Sarah Stephens with Cox Automotive to unpack how the IRS and Department of Labor actually evaluate worker classification, the factors nonprofits often overlook, and the steps organizations can take to protect themselves, as well as their board and management who may also face liability. Whether you are bringing on a consultant, a contract therapist, or summer help, this conversation will help you understand the spectrum from employee to contractor, and why that matters for your organization.

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