W2 vs. 1099: What You Need to Know

At PeerSource, we’ve placed thousands of candidates in contract roles across the country. One of the most important decisions for any professional is how they’re paid – W2 vs. 1099.

Some agencies offer what looks like a higher pay rate under a 1099 structure. But before you go that route, it’s important to understand the real cost of being a 1099 contractor.

Why PeerSource Offers W2 Employment

We believe in doing things the right way – for you and for compliance. That’s why we offer W2 employment to our locum professionals, along with a full support structure:

• We cover your employer payroll taxes and ensure you're properly classified to avoid legal risk
• We handle your payroll tax withholdings, so there are no surprises at tax time
• We offer health, dental, vision, and more, with employer contributions to keep your coverage affordable
• 401(k) with 4% company match after 90 days
• Paid sick leave and overtime pay
• We classify your travel and lodging expenses properly, protecting you from IRS audits

The 1099 “Higher Rate” Myth

Sure, a 1099 assignment might show a higher hourly rate, but it comes with hidden costs:

• You're on the hook for the entire 15.3% self-employment tax
• No benefits, such as health insurance, sick leave, or matching retirement plan
• No unemployment coverage if your assignment ends unexpectedly
• Quarterly tax payments, self-filing, and IRS audit risk if expenses aren’t reported properly
• You pay out-of-pocket for liability insurance, bookkeeping, and other “business” costs
• No malpractice/professional liability coverage – if something goes wrong in the clinic, you could be personally liable unless you’ve purchased your own insurance (which can be costly & complex to set up)
• Increased legal and financial risk – in some states, misclassifying certain healthcare roles as 1099 can lead to penalties, denied protections, and personal tax liability

Quick Cost Comparison

1099 may show a higher hourly rate up front, but once you account for taxes, missing benefits, and legal risks, W2 is generally the smarter and safer option. If you’re weighing offers, we’re here to help you make the best long-term decision for your career.

Reach out to us here to talk through your options as we would be happy to help.