Independent contractors, often referred to as 1099 workers, are not technically employees. Therefore, the concept of “certified payroll” which is tied to wage and hour compliance, does not apply to them. Certified payroll reports, typically required for government-funded projects, ensure compliance with prevailing wage laws and accurate reporting of employee wages, deductions, and benefits. Since independent contractors negotiate their own rates and are responsible for their own taxes and benefits, these reporting requirements are irrelevant.
Maintaining meticulous records for payments made to independent contractors remains crucial for several reasons. Accurate record-keeping simplifies tax reporting, facilitates smooth audits, and prevents potential legal disputes. While no certified payroll process exists for these workers, businesses should retain comprehensive records of all payments, including the date of payment, amount paid, and the services rendered. This disciplined approach strengthens financial transparency and safeguards the business against future liabilities.