For someone to legally be an independent contractor (what you call a 1099 contractor), they have to meet  the criteria to be one. You can find the criteria on the department of labor and IRS websites, but in brief, an independent must be *independent*. That means that if you tell them when to work (control their hours) or how to do their jobs, they are employees, not independent contractors. To use an example: the web developer with his/her own business whom you hire to create a website, where you tell them what you want, but then they work their own hours, at their own location, under their own direction--that's an independent contractor. The "freelance" tech support person or graphic artist you hire who works in your office, during normal working hours, and you tell them how and when to work--he or she is an employee.Independent contractors also provide their own tools and supplies; typically do not work for just one employer; can actually lose money on their business, if they have more expenses than income (as opposed to employees, who may not make a lot but don't actually run the risk of losing money), and generally market or advertise their own services.If you call and pay someone as an independent contractor when they really should be an employee, you are violating labor and  tax laws. You may get away with it--many employers "mischaracterize" employees this way. But if the employee files a complaint with a government agency or sues you, you can be liable for the benefits and tax withholding you should have paid them, and for additional wages and overtime if you failed to pay for all the hours they worked.