Classification that holds up in an audit.
Every 1099 engagement scored to the strictest applicable jurisdiction: IRS 20-Factor, ABC, IR35/CEST, Scheinselbststaendigkeit, CLT. Borderline cases are escalated to attorney review, with a written opinion where warranted. Seven-year audit-ready retention. Continuous, not a one-time questionnaire.
Analysts on every engagement, attorneys when a case needs them.
Classification is a technical discipline with a legal backstop. Our team pairs experienced analysts with a panel of employment attorneys retained specifically for the practice, a standing relationship we draw on whenever a case needs legal review.
Risk Operations Lead
Owns the compliance outcome. Your primary contact, the person who runs the monthly risk-posture report and the quarterly program review. Manages the interface between your legal team, our attorney panel, and the engagement-level classification work. When there's a regulatory notice or an audit request, the Risk Operations Lead owns the response.
Classification Analyst
Runs the scoring workflow on every engagement. Applies the applicable frameworks, documents the factor-by-factor determination, prepares Yellow/Red engagements for attorney review, and maintains the evidence file. The person whose signature is on the engagement-level classification file that will, years later, get pulled in an audit.
Attorney Panel
A standing panel of employment attorneys retained specifically for this practice, with country and jurisdiction specialization. Every Yellow and Red engagement is reviewed by the appropriate panel member, not escalated ad hoc. Written opinion, on letterhead, dated, retained in the engagement file. Not legal advice to your organization (that comes from your counsel), but a documented classification opinion that supports our determination.
What working with us is actually like.
Compliance work tests the culture of the provider more than any other service we run. The temptation in this business is always to tell the client what they want to hear: mark an engagement Green when the facts suggest Yellow, paper over the Yellow rather than remediate it, defer the difficult conversation about an engagement that should have been converted to W-2 months ago. That path ends at a settlement check.
We don't do that. We tell clients when an engagement is misclassified. We tell them when a supplier's paperwork won't hold up. We tell them when a specific state or country has changed position and the existing population needs to be re-reviewed. It's a harder sales motion and it's why our clients renew: as a Service-Disabled Veteran-Owned Business Enterprise, accountability is how we operate, not what we market.
Why classification needs more than a questionnaire.
The regulatory climate has fundamentally changed. The federal FLSA test keeps changing: the 2024 six-factor rule is now slated for rescission under a February 2026 proposal that would restore the narrower 2021 "core factors" test, and it will likely face litigation either way. None of that changes the state tests. California's AB 5 continues to drive PAGA litigation. HMRC's IR35 reforms placed the classification burden on the end client, not the contractor. Germany is actively prosecuting Scheinselbststaendigkeit cases into criminal territory. Brazil's labor courts presume CLT employment unless the organization proves otherwise. The penalty math has not gotten better.
Most organizations we talk to know this. What they don't always know is that their current defense (a questionnaire completed at engagement start, a spreadsheet tracking the results, maybe a legal review once a year) is no longer a defense. It is a paper trail of an outdated decision. When an auditor asks to see the classification evidence for a specific worker on a specific date, the answer needs to be a document dated before that date, reviewed by counsel, and supported by a methodology that can be explained in writing.
The regulators caught up to the business model
AB 5 (2020). IR35 off-payroll reform (2021). DOL rule (2024), now proposed for rescission (2026). UK umbrella PAYE liability (April 2026). Scheinselbststaendigkeit criminal prosecutions (ongoing). CLT presumption cases. Five years of regulatory tightening changed the baseline exposure for every organization running 1099 labor at scale. The compliance posture that worked in 2019 does not work now.
The IRS 20-Factor test is not enough, even in the US
Most US classification programs run the 20-Factor test and stop. AB 5's ABC test is stricter. Massachusetts, New Jersey, and Illinois have their own overlays. The federal economic-realities test, whichever version is in force, adds another lens. A single-test decision is a partial decision. Our platform scores every engagement against every applicable framework in parallel and surfaces the strictest result.
Classification that was right at day 1 may be wrong at day 400
Engagements drift. A contractor who was engaged for a discrete project becomes integrated into the team. A short-term engagement extends. Scope expands. Exclusivity develops. A one-time classification questionnaire cannot catch this, a continuous-scoring model can. We re-score every active engagement monthly against the current facts.
"We think we're compliant" is not a defense
When a regulator asks for the classification file on a specific worker, what exists? In most programs, the answer is a spreadsheet cell and an email chain. Our deliverable is a structured engagement file with the scoring methodology, the factor-by-factor determination, the attorney opinion where required, and the chain-of-custody documentation, retained for seven years beyond the statutory window.
We classify to the strictest test that applies.
Every engagement is scored against every framework that could apply to it: the worker's country, the worker's state or region, the client's state, the client's jurisdiction, and any treaty overlays. The platform surfaces the strictest applicable result, which is the one a regulator will apply if there is ever a question.
Federal baseline
Behavioral control, financial control, and relationship type. The federal floor. Still load-bearing, but not sufficient on its own, especially in AB 5 states.
CA, NJ, MA, IL, and others
A, B, and C prongs all must be met. Strictest test in most US jurisdictions. Prong B (outside the usual course of business) is the most common failure point.
FLSA · in flux
The 2024 six-factor test is proposed for rescission (Feb 2026) in favor of a two-core-factor test: control and opportunity for profit or loss. We score to the version in force and flag the delta. Read our briefing →
End-client determines
Since April 2021, the end client determines inside/outside IR35 for medium and large private-sector engagements. CEST tool outputs are tracked, supplier-chain verification documented, Status Determination Statements issued.
False self-employment
Five key factors: duration, integration, exclusivity, personal dependence, fixed working hours. Criminal exposure for employers where findings rise to intentional evasion of social contributions.
Labor court default
Brazilian labor courts presume CLT employment where habitual, subordinate, personal, and paid work is present. Nota Fiscal structure documented, CLT risk signals tracked continuously.
Travail dissimulé
French social-contribution evasion framework. Presumption shifts heavily where subordination markers are present. Surveillance has intensified since 2022.
Multi-factor test
ATO and Fair Work each have their own tests. 2022 High Court rulings (CFMMEU v Personnel Contracting) emphasized contract-as-written, which raises the bar on the initial engagement drafting.
How our classification process works.
The scoring workflow is not a one-time questionnaire. It is a continuous process that surfaces engagement drift, routes borderline cases to counsel, and retains the evidence your organization needs when a regulator asks.
Engagement scoring workflow
Intake
At engagement start
Structured intake from hiring manager, proposed contractor, and supplier. Worker country + client jurisdiction + scope-of-work captured. Initial framework applicability determined.
Score
Within 48 hours
Parallel scoring against every applicable framework. Strictest result surfaced as Green, Yellow, or Red. Factor-by-factor determination documented. Evidence file created.
Counsel review
Yellow/Red only
Attorney panel review. Written opinion issued with specific remediation guidance. Contract language recommended. Client decision documented on the record.
Monitor
Monthly, through end of engagement
Re-score every active engagement monthly against current facts. Drift alerts trigger re-review. Exit documentation preserved. Seven-year audit-ready retention begins.
Review cadence
Engagement scoring
Every active 1099 engagement re-scored monthly. Any material change in facts (scope, duration, integration) triggers re-review automatically.
Risk posture report
Written report to your legal and TA leadership: active engagements by risk tier, Yellow/Red remediation status, and any regulatory developments affecting your population.
Program risk review
Strategic review with your legal and procurement leadership. Risk posture, regulatory changes, enforcement trend analysis, and a documented forward plan for the next quarter.
Attorney re-opinion
Counsel panel re-opines on the program's overall compliance posture and any material changes in the regulatory landscape. Written, dated, retained alongside engagement files.
See it in Altitude Workspace.
Jurisdiction-first classification is built into the platform, not kept in a binder. These are the Altitude Workspace screens your compliance, legal, and procurement teams use to run a 1099 program.
Pricing based on your contractor population.
Program fee scaled to engagement volume
Single monthly program fee covers the scoring platform, Classification Analyst capacity, Risk Operations Lead, and all routine reporting. Scaled by active engagement volume, published in your MSA. No per-engagement charge on Green determinations.
Attorney review, scoped in your agreement
When IC Compliance runs inside a managed program, attorney review is built into the program pricing. For standalone engagements, attorney review is scoped and priced up front in your agreement. Either way, there are no retainer minimums and no surprise invoices.
Indemnification behind every Green
Where we issue a Green determination, we stand behind it with written indemnification against regulatory reclassification, scoped to cap and carve-outs in your MSA. Not unlimited, not ceremonial: real, capped, backed by our E&O and misclassification-wrap coverage.
Embedded in MSP, or standalone
Most clients buy IC Compliance as a capability embedded in their MSP program, the classification workflow is integrated into the standard engagement flow, priced inside the MSP fee. Standalone engagements are priced as a separate monthly program fee. Either way, the methodology and evidence are identical.
What an audit-ready program looks like.
Pair IC Compliance with MSP, RPO, and EOR.
Classification inside the engagement flow
Every 1099 engagement in your MSP program is scored automatically at intake. Yellow/Red routes to attorney review before deploy. No parallel workflow, no separate system, no handoff gap. This is how most of our clients deploy the capability.
Explore MSPThe landing pad for reclassifications
When an IC engagement should be converted to employment, EOR is how it happens without disruption. We handle the transition document trail: the reason for conversion, the effective date, the employment contract, and the preservation of working-relationship continuity.
Explore EORClassification before the offer
When RPO is recruiting for a role that a hiring manager wants to fill as 1099, the classification score runs pre-offer. Engagements that won't pass are reframed as W-2 before a bad offer is extended: saving the candidate, the hiring manager, and the organization from a reversal later.
Explore RPOContinuous scoring at platform speed
The 1099 Risk Scorecard is a native platform capability. Every engagement is scored continuously, every material change triggers re-review, every file lives in the Document Vault with immutable chain of custody.
Explore Altitude WorkspaceQuestions from legal and procurement.
What exactly does your indemnification cover?
Our indemnification covers regulatory reclassification of engagements we determined to be Green, subject to standard carve-outs (material fact change by the client after classification, fraud, willful misrepresentation) and a documented cap. The cap is negotiable per MSA and is typically set at 1x to 3x annual program fees, backed by our professional liability and misclassification-wrap insurance coverage. This is not unlimited indemnification, we believe unlimited indemnification is a red flag, because no insurance stack backs it.
How is your service different from an employment-law firm's classification review?
Law firms give advice: per question, per case, per hour. Our service is a continuous operational capability. We score every engagement, re-score monthly, maintain the evidence file, escalate to counsel only where warranted, and handle the retention and audit-readiness infrastructure. Think of us as the engineering and operations behind a classification program; your outside counsel remains the interpretive lawyer on matters that require legal opinion. Most of our clients use both, and the boundaries are documented.
How do you handle AB 5 specifically?
Every engagement with a California nexus runs against the ABC test in parallel with the IRS 20-Factor test. Where Prong B (outside the usual course of business) fails, which is common, the engagement surfaces as Red automatically. PAGA exposure is modeled separately. We also track and apply the statutory exemptions (business-to-business, referral agency, professional services, construction trucking, etc.) and document which exemption is being relied upon per engagement.
We're already IR35 compliant. What do you add?
Most "IR35 compliant" programs are running CEST once and documenting the result. We run CEST on intake, re-run on any material scope change, pair it with supplier-chain verification (the KID/KAD determination), and maintain the Status Determination Statement chain from end client through agency to PSC. We also overlay other UK employment-status frameworks (Ready Mixed Concrete, HMRC Employment Status Manual) because HMRC does. For multi-jurisdiction engagements (IR35 + another country test), we run both in parallel.
What happens during a government audit?
We support audit response on engagements we classified. Specifically: retrieval of the complete engagement file (classification determination, factor-by-factor scoring, attorney opinion where issued, supporting evidence, chain-of-custody log) in the format and within the timeframe the auditor requires. We coordinate with your outside counsel on the response strategy. We have a documented audit-response SOP and have supported responses for DOL WHD, IRS SS-8 referrals, state UI audits, and HMRC status reviews. Seven years of retention means the file is available regardless of which year the auditor is asking about.
How much of this is automated vs. human review?
The scoring is automated: applying each framework's factor set against the intake data produces a determination and a confidence score. Yellow and Red outputs are always human-reviewed by a Classification Analyst before any determination is final, and attorney-reviewed where the program or jurisdiction requires. Green outputs below a confidence threshold also route to human review. We do not issue a classification determination based solely on machine scoring, every final decision has a person accountable for it, documented in the engagement file.
Can you review engagements we classified before working with you?
Yes. Most new clients ask us to run a baseline review on their existing 1099 population as the first phase of engagement, typically a 30-day effort depending on population size. The deliverable is a written risk posture report: engagements by risk tier, recommended remediation actions, attorney opinions on the highest-risk cases, and a documented plan to remediate or convert the problematic engagements. This is usually the first thing we do, not the last.
Let’s talk about your 1099 program.
Tell us about your contingent population: size, jurisdictions, supplier structure, any recent notices or concerns. A Classification Analyst, not a sales queue, replies within one business day. Within five, you'll have a written risk-posture snapshot.