According to The Upwork Research Institute, U.S. freelancers generated $1.5 trillion in total earnings in 2024, demonstrating the economic impact of the independent workforce.
In 2025, more than one in four (28%) U.S. knowledge workers are freelancing or working independently, reflecting a significant shift toward flexible work models.
As non-traditional work models become the norm, HR and compliance teams face urgent questions:
Which workers require a Form I‑9?
How can businesses verify work authorization while avoiding misclassification or discrimination?
What happens when contractors become full-time employees?
The Department of Homeland Security (DHS) mandates that all employers complete Form I‑9 for each new W‑2 employee hired in the U.S. However, independent contractors (1099) and freelancers are not subject to I‑9 requirements—unless they are later converted to employees or are misclassified.
Still, that doesn’t mean companies are off the hook. Employers that rely heavily on third-party labor may be investigated if:
Workers are improperly classified to avoid compliance obligations
There’s evidence of knowingly hiring unauthorized workers
The company exercises control over day-to-day work, creating an “implied” employment relationship
With gig workers sometimes working alongside W‑2 employees, it’s easy for compliance lines to blur.
While you may not need to complete a Form I‑9 for every 1099 contractor, the risk lies in the misclassification. In 2024, the Wage and Hour Division of the U.S. Department of Labor recovered more than $273 million in back wages and damages for nearly 152,000 workers nationwide.
Misclassification can trigger:
ICE audits and fines
Lost federal contracts for national security or infrastructure
Penalties of up to $28,619 per I‑9 violation for worker misclassification or unauthorized employment
As more states pass laws expanding worker protections and audit frequency increases under the 2025 executive orders, these issues are coming to the forefront.
As more states pass laws expanding worker protections and audit frequency increases under the 2025 executive orders, these issues are coming to the forefront.
To reduce risk and ensure clarity, HR leaders should:
✔️ Conduct classification audits
Work with counsel to review which workers require I‑9s and how contractors are engaged.
✔️ Track employment status changes
If a contractor converts to employee status, ensure a Form I‑9 is completed within 3 business days.
✔️ Maintain clear contracts with third parties
When using staffing agencies or vendors, ensure they’re responsible for I‑9 compliance and provide documentation upon request.
✔️ Use a centralized I‑9 platform
Standardize how I‑9s are issued, stored, and audited across all worker types and locations.
✔️ Train HR and legal teams on evolving definitions
Stay up to date on changes to worker classification and enforcement trends at the federal and state level.
Clear I‑9 by HRlogics helps businesses navigate the gray areas of compliance with confidence.
For onboarding W‑2 employees or converting contractors, the platform provides:
Live I‑9 Video Verifications for remote or distributed hires
Automated audit alerts for missing or expiring documents
Centralized dashboards to track compliance across departments and states
Tamper-proof storage and digital signatures for peace of mind
Seamless integration with E‑Verify, payroll, and HRIS platforms for up-to-date verification workflows
For organizations navigating dynamic workforce models, Clear I‑9 eliminates guesswork and protects your business from the start.
For organizations navigating dynamic workforce models, Clear I‑9 eliminates guesswork and protects your business from the start.
The future of work isn’t traditional—your compliance solution shouldn’t be either.
Stay compliant, reduce risk, and adapt confidently with Clear I‑9.
Ready to simplify compliance for every worker type?
Schedule a Clear I‑9 demo today and future-proof your I‑9 strategy.