PAINTER EMPLOYEE VS SUBCONTRACTOR
Published October 2026
7.65%
EMPLOYER FICA
6.2% Social Security + 1.45% Medicare on an employee's wages (IRS Topic 751)
$2,000
1099-NEC THRESHOLD
Nonemployee pay for 2026 and later (IRS 1099-NEC instructions)
3
IRS EVIDENCE GROUPS
Behavioral, financial, type of relationship
Employee or subcontractor: the short answer
Hire employees for the painters you schedule, train, equip and direct every day: that is what the law treats as employment, and it is how you build a crew whose quality you control. Use subcontractors for genuinely independent businesses you hand a defined scope to: a drywall finisher, a wallpaper hanger, a spray crew with its own rig and insurance, a whole exterior.
The choice is not only about cost. It is decided by how the work is actually run, and getting it wrong is expensive.
How the IRS tells them apart
The IRS looks at the whole relationship and says the question is whether you have “the right to control the details of how the services are performed.” It groups the evidence three ways:
| IRS group | Points to employee | Points to subcontractor |
|---|---|---|
| Behavioral control | You set hours, methods and the order of work; you train them | They decide how and when; you judge the finished result |
| Financial control | You supply sprayers, ladders, paint; you pay by the hour; you reimburse costs | Own equipment and insurance; bid per job; can make or lose money |
| Type of relationship | Ongoing, open-ended; benefits; painting is your core service | Defined project, written contract, works for other contractors |
What each one costs you
| Employee painter | Subcontractor | |
|---|---|---|
| Pay | Hourly or salary through payroll | Per job or per bid, on invoice |
| Your payroll taxes | Employer FICA 7.65% plus federal and state unemployment tax | None; they pay self-employment tax |
| Workers' compensation | Required in most states once you have employees | They carry their own; collect a certificate |
| Liability insurance | On your policy | Their own policy, ideally naming you |
| Year-end paperwork | W-2 | 1099-NEC at $2,000+ for 2026 payments |
| Control of quality | Direct: you train and supervise | By contract: scope, standards, punch list |
Put the true cost of an employee into your prices with the labor cost calculator, which builds burdened hourly cost, and the overhead calculator for the office side.
Worked example: one painter, one week
The comparison painters usually make is wrong: they set an employee's hourly wage against a subcontractor's price and conclude the sub is expensive. The sub's price already carries their payroll taxes, insurance, tools, vehicle and downtime. Your employee's wage does not.
| Employee painter, 40 hours at $25/hr | Weekly | Basis |
|---|---|---|
| Wages | $1,000.00 | 40 x $25 |
| Employer Social Security and Medicare | $76.50 | 7.65% of wages (IRS Topic 751) |
| Unemployment tax, workers' comp, benefits | Your rates | Set by your state, insurer and policies |
| Unbilled time (drive, shop, rain) | Your share | See billable share in the overhead calculator |
| Tools, ladders, sprayers, vehicle | Yours | Overhead, spread over billable hours |
Only the first two lines are fixed by law; the rest depend on your state, your insurer and your schedule, so fill them from your own numbers. The labor cost calculator builds the full burdened rate, and the overhead calculator spreads trucks and tools over billable hours. Compare that total with a sub's price for the same scope.
Red flags that a 1099 painter is really an employee
- They work only for you, every week, with no end date.
- You set their start time and hours, and they clock in.
- You supply the sprayer, ladders, drop cloths and paint, and they bring nothing.
- You pay by the hour regardless of how the job goes.
- They wear your company shirt and drive your truck to every job.
- There is no written agreement, no certificate of insurance and no W-9 on file.
Each of these points toward control by you under the IRS's behavioral and financial evidence groups. One alone does not decide it; several together are what an auditor looks for.
Using painting subcontractors the right way
- Hire businesses, not individuals you manage: their own tools, insurance, other customers.
- Give a scope and a price, not a schedule of hours. Judge the result with a punch list.
- Collect a W-9 and current certificates of insurance before they start.
- Sign a written agreement: the subcontractor agreement template covers scope, insurance, payment and who supplies materials.
- On pre-1978 homes, confirm their EPA lead-safe certification; see lead paint certification.
When to make the first hire
Most painting companies move from subs to employees when the work becomes steady enough to schedule a crew every week and the owner wants control over how the job looks. The start-up guide and the insurance guide cover the registrations and policies the first hire triggers.
Employee vs subcontractor: common questions
Can I pay a painter as a 1099 subcontractor if I tell them how to do the work?
That is the risk. The IRS says what matters is whether you have the right to control the details of how the services are performed. If you set the hours, supply the tools and materials, and direct the work like you would an employee, calling the painter a subcontractor does not make them one.
When do I have to send a painting subcontractor a 1099-NEC?
For payments made in 2026, the IRS instructions for Form 1099-NEC set the nonemployee compensation threshold at $2,000 or more in the year. Earlier years used $600. Collect a Form W-9 before the first payment so you have the legal name and taxpayer ID.
What happens if I misclassify a painter?
The IRS says a business that treats an employee as an independent contractor without a reasonable basis may be held liable for employment taxes for that worker. States can add unemployment insurance and workers' compensation consequences on top.
Who decides if a painter is an employee or a contractor?
You make the call when you hire, but the IRS, the Labor Department and state agencies can each review it under their own tests. Either the business or the worker can ask the IRS for a ruling on Form SS-8; the IRS says a determination may take at least six months.