The biggest test of a W-2 employee vs a 1099 worker is that of control. Who controls the how the work is performed, how workers are trained, and the results of the work dictate if someone is an employee or a 1099 worker.
A 1099, or independent contractor is just that, someone one who contracts their services to other businesses. The independent contractor has the right to control what work they will perform, how it will be done and when. An independent contractor will not be provided training or instruction by the employer.
A W-2 employee on the other hand, once hired by an employer receives all direction from that employer. The employer has the right to set the employee’s schedule, provides training and instruction to the employee.
With regards to pay, a W-2 employee is most often paid by the hour or day, while an independent contractor is paid by job. Another distinction is with benefits. An employee may become eligible for benefits, while a 1099 contractor is not eligible for benefits.