Can I classify my intern as a 1099 contractor or must they be a W-2 employee?

Employers often want to classify workers as 1099 as that shifts to the employee the employer’s payroll tax and other obligations. There are times when that shifting is appropriate such as for commission-based, salespeople who represent multiple manufacturers when selling to retailers. Too often, however, what is really happening is that the employer is simply trying to shift their obligations to the employee. In effect, the employee is therefore subsidizing the business operations of the employer.

The IRS has a page that outlines how employers are to evaluate whether a worker can be classified as a 1099 or W-2:
https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee. Key language on that page:

Facts that provide evidence of the degree of control and independence fall into three categories:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.

The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and finally, to document each of the factors used in coming up with the determination.