Hiring your first technician

Employee or independent contractor

The IRS looks at three kinds of evidence: behavioral control (do you direct how the work is done), financial control (who pays expenses and supplies tools), and the type of relationship (contracts, benefits, whether the work is central to your business). There is no magic number of factors. If you are unsure, you or the worker can file Form SS-8 for an IRS ruling, but expect to wait six months or more.

The Labor Department runs its own test for wage law. It has stopped applying its 2024 contractor rule in investigations, and on February 26, 2026 it proposed replacing it with a test built on two core factors: how much control the worker has, and the worker’s chance for profit or loss from initiative or investment. Comments closed April 28, 2026. As of September 30, 2026 no final rule has been issued.

In practice, a tech who works your accounts, in your truck, under your licence and your schedule looks like an employee under both tests. Treat 1099 arrangements as the exception that needs a written reason.

Wages, overtime and commission pay

Covered employees get time and one-half their regular rate for hours over 40 in a workweek. Commissions do not change that on their own. They are part of the regular rate used to figure overtime.

The section 7(i) exemption lets some commission-paid employees skip overtime, but only at a retail or service establishment: one where 75% of annual sales of goods or services are not for resale and are recognized as retail in the industry. The regular rate must also exceed 1.5 times minimum wage every overtime week, and commissions must be more than half of pay over a representative period of one month to one year.

No federal rule says pest control qualifies. In 2020 the Labor Department withdrew its old industry lists and now applies the same Part 779 analysis to every establishment. Mixed residential and commercial work makes the 75% test harder to call. Get a wage-hour attorney’s opinion before you rely on 7(i), and keep accurate hours records either way.

New-hire paperwork

Form I-9: the employee completes Section 1 no later than the first day of work. You complete Section 2, after examining their documents, within 3 business days of the first day of work for pay. A tech who starts Monday needs Section 2 done by Thursday.

Collect a federal Form W-4 for withholding. Federal law also requires you to report each new or rehired employee to the state where they work within 20 days of hire; some states require it sooner. Many employers send the W-4 data, and states prefer electronic reports through their new-hire website.

Workers’ comp and technician licensing

Workers’ comp rules are set state by state. Call your state workers’ comp agency or a licensed agent before the first day and have coverage in place when the tech starts, not after the first injury.

Before a new tech treats a single account, check what your state requires of technicians: a registration, an ID card, a licence, or direct supervision rules. Our state start pages for Texas, Washington, Florida, California and South Carolina list the requirements with sources.

This is general information, not legal or tax advice. Confirm classification and pay plans with the Labor Department, the IRS, your accountant or an employment attorney.