W-2 or 1099 for cleaners: what is the short answer?
For most cleaning businesses, cleaners are employees and should be paid through payroll on a W-2. They can be 1099 independent contractors only when they really run their own business: they set their own hours and methods, bring their own supplies, carry their own insurance and work for other clients too.
The label you choose does not decide it. A signed “independent contractor agreement” does not make someone a contractor if, in practice, you control the work. The IRS, the US Department of Labor and your state each apply their own test to the facts, and each can reach its own answer.
A quick self-check
| If you… | It points to |
|---|---|
| Set their schedule and assign which homes they clean | Employee |
| Train them on your checklist and inspect their work | Employee |
| Supply the products, vacuums and uniforms | Employee |
| Pay by the hour, and set the price the client pays | Employee |
| Expect them to work for you week after week, with no end date | Employee |
| Hire a separate business that quotes its own price, uses its own methods and supplies, and works for many companies and homeowners | Contractor |
Please note: this guide is general information, not legal or tax advice. Classification rules change and differ by state, so confirm your situation with an accountant or employment lawyer before you decide.
How does the IRS decide if a cleaner is an employee?
The IRS uses the common-law control test: a worker is an employee if the business has the right to control what they do and how they do it. It groups the evidence into three categories: behavioral control, financial control and the type of relationship (IRS).
| IRS category | What the IRS asks | Typical cleaning company crew |
|---|---|---|
| Behavioral control | Does the business control, or have the right to control, what the worker does and how? | You assign homes and times, require your checklist, train on your methods and check quality. Points to employee. |
| Financial control | Who controls the business side: how the worker is paid, who pays expenses, who supplies tools? | You pay hourly, supply products and equipment, and set what the client pays. The cleaner has no chance of profit or loss. Points to employee. |
| Type of relationship | Written contracts, benefits, how long the relationship lasts, and whether the work is a key part of the business | Ongoing, with no end date, and cleaning is the core of what your business sells. Points to employee. |
No single factor decides it; the IRS looks at the whole relationship. But a crew that works only for you, on your schedule, with your supplies, at your prices, is a textbook employee arrangement.
If you are truly unsure, you or the worker can file Form SS-8 to ask the IRS for a determination. The IRS says it may take at least six months to get an answer, so it is not a quick fix for a hire you are making next week.
What does the Department of Labor test look at?
The US Department of Labor uses an “economic reality” test under the Fair Labor Standards Act (FLSA), the law behind federal minimum wage and overtime. It asks whether the worker is economically dependent on your business or is really in business for themselves.
The federal rule has been changing, so here is where it stood in October 2026:
- A 2024 Department of Labor rule, effective March 11, 2024, set out a six-factor, totality-of-the-circumstances analysis.
- In May 2025, the department told its investigators to stop applying the 2024 rule in enforcement and to use its older guidance (Fact Sheet #13 from 2008, as informed by a 2019 opinion letter) instead.
- On February 26, 2026, it proposed replacing the 2024 rule with a test that gives the most weight to two core factors: how much control the worker has over the work, and their opportunity for profit or loss. Other factors include the skill required, how permanent the relationship is, and whether the work is part of an integrated unit of production.
Check the Department of Labor’s rulemaking page for the latest status before you rely on any version. For a cleaning crew, though, the result is usually the same under each version: a cleaner paid hourly, on your schedule, with no way to earn more by running the work better, has little control and no real opportunity for profit or loss.
This test matters because it decides who is owed minimum wage and overtime. A misclassified cleaner who worked 45 hours in some weeks, or was never paid for drive time between homes, can claim the unpaid wages.
What is the California ABC test, and what about other states?
California presumes every worker is an employee unless the business proves all three parts of the ABC test. For a company that cleans homes, part B almost always fails, because a house cleaner is doing the company’s usual work.
According to the California Labor and Workforce Development Agency, a worker is an independent contractor only if:
- A: they are free from the company’s control and direction in doing the work, both under the contract and in fact;
- B: they do work that is outside the usual course of the company’s business; and
- C: they are customarily engaged in an independently established trade, occupation or business of the same kind as the work.
The test comes from the California Supreme Court’s 2018 Dynamex decision and was written into state law by AB 5 in 2019. A maid service that hires cleaners to clean its clients’ homes cannot pass part B, so those cleaners are employees in California for wage and most other state law purposes, whatever the contract says.
The stakes are real. California’s Labor Code section 226.8 sets civil penalties of $5,000 to $15,000 for each willful misclassification, and $10,000 to $25,000 for each violation when there is a pattern or practice of it.
Other states
- Several states, including Massachusetts and New Jersey, use ABC-style tests for some or all of their wage or unemployment laws.
- State unemployment insurance agencies and workers’ compensation boards often have their own definitions, so a worker can be an employee for one state program even if you think they are a contractor for another.
- Your state labor department’s website usually has a plain-language page on employee versus contractor status. Read your state’s before you decide.
1099 vs W2 cleaning business costs: a worked example
Paying cleaners on a W-2 adds roughly 10% to 15% on top of wages in many states, through employer payroll taxes and workers’ compensation. That is less than many owners fear, and a contractor who prices their own taxes fairly ends up charging close to the same amount.
Here is one cleaner at $20 an hour, 30 hours a week, 50 weeks a year (1,500 hours). The state rates are examples only; replace them with yours.
| Employee (W-2), per year | Amount |
|---|---|
| Wages: 1,500 hours × $20 | $30,000 |
| Employer Social Security (6.2%) and Medicare (1.45%) | $2,295 |
| Federal unemployment (FUTA): 0.6% of the first $7,000 | $42 |
| State unemployment, example: 2.7% of a $9,000 wage base | $243 |
| Workers’ comp, example: $3.00 per $100 of payroll | $900 |
| Total cost | $33,480 ($22.32 an hour, 11.6% over wages) |
The FUTA figure assumes you get the full 5.4% credit for paying state unemployment tax, which brings the 6.0% federal rate down to 0.6%. Employers in “credit reduction” states pay more (IRS). State unemployment rates and wage bases, and workers’ comp rates, vary widely by state, insurer and claims history.
What a fair contractor rate looks like
A real contractor pays both halves of Social Security and Medicare as self-employment tax: 15.3% on 92.35% of their net earnings. To take home the same $27,705 the employee keeps after their own 7.65%, a contractor needs about $32,260 a year, or about $21.50 an hour, before paying for their own supplies, insurance and driving. Add those and a fair contractor rate passes the $22.32 an hour the employee costs you.
So when a 1099 setup looks much cheaper, it is usually because the cleaner is quietly carrying taxes, insurance and risk that the law puts on you. That gap is also what a misclassification claim tries to recover. To see what any labor cost does to your margins, use the cleaning business profit calculator.
What happens if you misclassify cleaners?
You can owe the employment taxes you did not pay, back wages for minimum wage and overtime, state unemployment and workers’ comp premiums, plus penalties and interest. The bill often arrives when one cleaner files for unemployment or gets hurt on the job.
- Federal taxes. The IRS can assess income tax you should have withheld, Social Security and Medicare (both halves in some cases) and FUTA, with penalties and interest. Relief may apply if you had a reasonable basis and treated all similar workers consistently (IRS). A misclassified worker can report their share of Social Security and Medicare on Form 8919, which points the IRS straight at you.
- Back wages. Under the FLSA, unpaid overtime above 40 hours a week and any shortfall below minimum wage, which can include unpaid drive time between homes.
- Unemployment claims. When a “contractor” files for unemployment, the state agency decides their status. A finding that they were an employee can lead to an audit of everyone you paid on a 1099.
- Injuries. If a misclassified cleaner is hurt and you have no workers’ comp for them, you may face the medical bills and state penalties for being uninsured. Our guide to insurance for cleaning businesses covers workers’ comp by state.
- State penalties. California’s willful misclassification penalties start at $5,000 per violation, and other states have their own.
When can a house cleaner be an independent contractor?
A house cleaner can be an independent contractor when they run their own cleaning business and you hire that business for a job, the way you would hire a carpet cleaner or a window washer. The more of the list below that is true, the stronger the case.
- They have their own business name, registration and liability insurance, and can show it.
- They advertise to the public and work for other companies and homeowners, not only you.
- They quote their own price for the job, and can make more or less money depending on how they run it.
- They decide how and when the work is done, within the deadline you agreed.
- They bring their own supplies and equipment.
- They can hire their own helpers or send someone else.
- They invoice you, and you can end the arrangement only on the contract’s terms.
Even then, California’s part B makes subcontracting house cleaning to a house cleaning company hard. The state has a narrow business-to-business exemption with a long list of conditions, so get advice before you rely on it.
The common setup that does not work: a cleaner who used to be on your payroll, now “on a 1099,” doing the same homes, on the same schedule, with your supplies and checklist. Nothing about the work changed, so the classification should not either.
Working alone and selling directly to homeowners is different again: you are then the independent business. Our guide on how to start a cleaning business covers that setup.
What paperwork does each option need?
Contractors need a Form W-9 at the start and a Form 1099-NEC after the year ends if you paid them enough. Employees need a W-4 and I-9 when they start, payroll tax withholding and deposits all year, and a W-2 after the year ends.
| Step | 1099 contractor | W-2 employee |
|---|---|---|
| Before the first job | Form W-9 (name, tax ID), written contract, proof of their insurance | Form W-4, Form I-9, state forms, new hire report, workers’ comp |
| Each payday | Pay their invoice; no withholding | Withhold income tax, Social Security and Medicare; pay the employer share |
| During the year | Nothing to file | Payroll tax deposits and quarterly Form 941; state filings |
| After the year ends | Form 1099-NEC if you paid them $2,000 or more in 2026 | Form W-2 for every employee, and Form 940 for FUTA |
The 1099-NEC threshold changed for 2026: report payments of $2,000 or more a year to a non-employee for payments made after December 31, 2025, up from $600 (IRS). The IRS can adjust the amount for inflation after 2026. A higher filing threshold does not change who is an employee; it only changes when you file the form.
For new employees, our guide on hiring cleaners covers the I-9 deadlines and the first two weeks of training.
How do you move cleaners from 1099 to W-2?
Pick a start date at the beginning of a pay period, set up payroll and workers’ comp before it, and explain the change to your cleaners in writing. Talk to an accountant first about whether to address past years, including through the IRS settlement program.
- Get advice. An accountant or employment lawyer can tell you your exposure for past years and the cleanest way forward in your state.
- Consider the IRS Voluntary Classification Settlement Program. If you consistently treated the workers as contractors, filed their 1099s for the previous three years and are not under an employment tax audit, you may qualify. You file Form 8952 at least 120 days before you start treating them as employees, and pay 10% of the employment tax that would have been due on their pay for the most recent tax year, without interest or penalties on that amount (IRS).
- Set up payroll. Choose a payroll provider, register for state withholding and unemployment accounts, and add the cleaners to your workers’ comp policy.
- Collect new forms. W-4, I-9 and state forms from each cleaner, and file new hire reports.
- Explain the pay. Their gross pay may look lower than a contractor rate, but they will no longer pay the employer half of Social Security and Medicare, and they gain unemployment and workers’ comp protection. Show a sample pay stub next to their old net.
- Track hours properly. Employees need accurate hours, including drive time between homes, for minimum wage and overtime.
BroomBook records hours from each cleaner’s clock-in and clock-out in the crew app, splits tips across the crew on each job, adds commission if you pay it, and exports one CSV for your payroll provider. It does not run payroll or file taxes. See the payroll page for details.