The Department of Labor has a six-question quiz for your 1099 guys, and the price of failing it runs $22,000 to $28,000. Per guy. Per year. Going back three years.

DOL's proposal drags back the “economic reality” test from 2021, the one Trump rolled back. Six factors decide whether a man's really a contractor: does he have a shot at profit or loss, does he own his own equipment, how permanent is the arrangement, who controls the work, is the work integral to your business, and does he bring his own skill and initiative. Lean W-2 on most of those and he's W-2, period. The invoice doesn't get a vote.

I know what you're thinking, because it's what everybody thought last time: they'll never enforce it. And last time you were right — enforcement was thin. This version comes with a proposed budget for a 40% increase in Wage and Hour Division field staff. They're not writing this one for the shelf. They're hiring the guys who knock on doors.

Who needs to sweat: the GC with a stable of “preferred” 1099 subs who work 80-plus percent of his jobs, don't advertise anywhere else, and don't own their own equipment. Framing crews that are contracted on paper but have exactly one client. Paint and drywall shops running 1099 finishers on the shop's own sprayers. If your ears just got warm, keep reading.

Because the bill on a reclassification is ugly: back-pay for overtime, the employer's side of FICA at 7.65%, unemployment, workers comp — all of it, reaching back three years. On a $60k-a-year “sub,” that pencils out to roughly $22-28k of exposure per person, per year. Multiply by however many guys you've got on 1099 and you're not looking at a fine. You're looking at a second mortgage.

The lawyers' homework is three items, and for once the advice is cheaper than the problem. Every 1099 sub invoices from a real business entity — an LLC or an Inc, not his name scrawled across a Word doc. Every one of them carries general liability insurance in that business's name. And every one of them can show he does work for other GCs, not just you.

Here's the uncomfortable part: the rule's core assumption isn't crazy. If you've got six-plus 1099 guys who work for you full-time, on your gear, at your direction, the government figures you're calling employees contractors to skip payroll tax — and from where they sit, the math backs them up. The guys with genuinely independent subs have nothing to fix but paperwork.

So fix the paperwork. It's a few phone calls this month, or it's three years of back taxes the day some brand-new field agent decides your framing crew looks awfully permanent.