Yes, a "1099 employee" (more accurately, an independent contractor) can have their contract terminated, but it's not "firing" in the employee sense; it's ending a business relationship, usually by following the terms in their contract, though they can sue for wrongful termination if the termination breaches the contract or violates anti-discrimination/retaliation laws. While traditional wrongful termination protections don't apply, contractors have recourse if the termination is discriminatory (race, gender, etc.), retaliatory (whistleblowing), or violates specific contract clauses.
Contractors aren't considered employees, so as long as you follow the agreed upon contract, you can let them go as needed and they cannot sue for wrongful termination. 1099 employees, however, can sue for breach of contract, if you don't respect the contract terms and conditions.
Though eligibility varies, most states can provide self-employed people with PUA. If they qualify for PUA, the 1099 workers will not apply for regular state unemployment benefits. Under PUA, they can receive up to 39 weeks of benefits.
1099 Drawbacks
There is a degree of risk with misclassification and non-compliant contracts. For workers: 1099 workers lack the stability that comes with being a W-2 employee. Also, most are ineligible for company benefits and may pay more in taxes.
Sections §12940 – 12952 of California's Government Code safeguard employees from any form of discrimination, but the protection does not extend to independent contractors. Unless your contract has a fixed term, your employer can terminate your services without notice and for any reason.
An employer cannot change a person's status from that of an employee to one of an independent contractor by requiring a written agreement to that effect or by giving them an IRS Form 1099 instead of a W-2.
Workers' compensation provides financial support for medical expenses and lost wages for employees injured on the job, but independent contractors are generally excluded from these benefits. California labor laws classify independent contractors as self-employed individuals, meaning they are responsible for their own ...
Once you've decided to terminate the contract, make sure you:
As an independent contractor, you have the right to receive payment for your services. A company that hires an independent contractor is not responsible for tax withholdings, benefits, or workers' compensation coverage for the 1099 employee.
Unfortunately, facing a potential lawsuit is a fact of life for many small construction businesses. According to the U.S. Chamber of Commerce, businesses spend an average of $1.2 million annually fighting litigation.
Everything You Need to Know: The Pros and Cons of Becoming an Independent Contractor
You don't have to worry about 1099 employee taxes, overtime rules, unemployment contributions, workers' compensation, or other regulations that govern W-2 employees. For example, freelancers make their own hours, so there are no restrictions on how many hours a 1099 employee can work.
Even as a 1099 employee, you still have some rights under California law. For instance, you can sue your employer for wrongful termination if they unfairly dismiss you.
Statutes and Contracts
For instance, in California, a general contractor is held liable for a minimum standard of construction for 10 years post-building completion, with certain defects claimable only within 1 or 4 years.
If you want to leave before the last day of your contract, check if the contract says you can give notice. If it doesn't say anything, you should give at least 1 week's notice.
The final rule uses a totality-of-the-circumstances analysis that considers six factors, giving no individual factor predetermined weight. The factors include: Opportunity for profit or loss depending on managerial skill* Nature and degree of control* Degree of permanence of the work relationship.