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Company Terminates 1099 Worker Without Warning, Gets Reported To The IRS

by Leona Pham
December 14, 2025
in Social Issues

Losing a job is hard enough, but being cut loose without warning can leave a bitter aftertaste that’s hard to shake.

One worker thought they had found the perfect arrangement: a flexible 1099 role that fit neatly alongside a full-time job, paid well, and came with positive feedback from clients. Everything seemed fine until the company’s demands quietly started to change.

Suddenly, flexibility disappeared. Strict schedules, constant check-ins, and control that didn’t align with contractor status became the norm. When the termination email arrived late at night with no explanation, frustration turned into something else entirely.

After sitting with it for a few days, the worker made a decision that could have serious consequences for the company. Was it retaliation, or simply holding an employer accountable? Keep reading to see how this situation escalated.

A contractor is abruptly fired after pushing back on rules, then takes a drastic step against the company

Company Terminates 1099 Worker Without Warning, Gets Reported To The IRS
not the actual photo

'Terminated without warning. Reported them for tax evasion?'

I was working a 1099 position that was bringing in around an extra $3k a month.

I was able to do this job alongside my full-time job with no issues.

I turned in my work on time, I attended all meetings, and even had gotten a great report from one of my clients.

My job must have suspected I was doing more than one position, however.

They started demanding that I check my email at least once an hour, and even set hours for me as a 1099 worker.

I had to report when I was out of office, whether for injury or something else.

I pointed out how I was a 1099 contractor and that none of those things were a contractual obligation;

in fact, the entire reason I took on the extra work with this company was the flexibility. They ignored this and continued to push.

A few weeks ago, at nearly midnight, I received a termination email. No phone call. Not even a text message.

I went to log on to my computer the next day and saw my credentials were invalid.

I reached out to my supervisor and was told to check my personal email, “If you even do that,” and that was the end of it.

I stewed in it a few days before I finally did something: I reported them for mislabeling my position as 1099

when in fact I should have been a W2 employee.

The IRS has a ton of information on what constitutes 1099 work and what doesn’t,

and I met none of the criteria for 1099 work. They were doing this to avoid paying taxes on their employees,

and to avoid having to offer insurance. So…I reported them.

I would wager that this is still ongoing for them, as it’s only been a few weeks.

I’m not excited about potentially putting people out of work, but I’m tired of being f**ked over by employers.

Edit: I submitted a form to my state department of labor and will be calling them tomorrow.

At some point, many workers learn a difficult truth: flexibility can quietly turn into exploitation when employers blur legal lines and rely on silence to maintain control.

The shock doesn’t come from losing a job alone, it comes from realizing that doing everything right still doesn’t protect you when boundaries are inconvenient for those in power.

In this situation, the OP wasn’t simply terminated from a side role. They were dismissed after pushing back against expectations that contradicted the legal definition of independent contract work. As a 1099 contractor, the OP was entitled to control how and when work was completed.

Instead, the company imposed hourly check-ins, fixed availability, and reporting requirements, conditions more consistent with employee status. When the OP pointed this out, the relationship shifted.

The late-night termination email, paired with revoked access and dismissive communication, sent a clear message: compliance mattered more than performance.

What divides readers is the decision to report the company. Some frame it as retaliation. Others see it as accountability.

Psychologically, this split often reflects different experiences with power. People who haven’t been harmed by misclassification tend to emphasize peace and discretion. Those who have lived it recognize a pattern: companies benefit financially from mislabeling workers while shifting risk entirely onto individuals.

The legal distinction here is not subjective. According to the Internal Revenue Service, independent contractors must retain behavioral and financial control over their work.

Employers who dictate schedules, require constant availability, or supervise processes may be misclassifying workers often to avoid payroll taxes and benefits.

From a psychological standpoint, Verywell Mind explains that exploitative workplaces often thrive in ambiguity. Contract workers, gig employees, and freelancers are especially vulnerable because they lack job security and are easily replaced. Retaliation, such as sudden termination, frequently follows when boundaries are asserted.

Seen through this lens, the OP’s report wasn’t impulsive or vindictive. It was procedural. They didn’t invent wrongdoing; they directed regulators toward practices that already existed. Any fallout that follows is a consequence of the company’s choices, not the act of reporting them.

The discomfort the OP feels about potential consequences is human. But accountability isn’t cruelty, it’s correction. Systems that rely on silence only change when someone documents what others quietly endure.

A realistic takeaway isn’t that reporting employers is easy or satisfying. It’s that legality and fairness don’t enforce themselves. When companies cross lines, speaking up isn’t revenge, it’s how those lines are redrawn so fewer people are quietly exploited next time.

Here’s what the community had to contribute:

These users backed OP emotionally, stressing the employer caused the fallout, not the report

Tremenda-Carucha − It's mind-blowing how fast things can go sideways when companies cut corners like that...

I mean, you're working hard and then boom, you're gone. How do people even keep going after something like that?

jiggalette − I hate employers that do s__t like this. It actually happens a lot more than we think.

Good for you. They deserve everything coming to them

Public_Road_6426 − You wouldn't be the one putting anyone out of work; your former employer is.

They're the ones cheating the system, not you.

These Redditors urged reporting the employer to state labor boards for faster, tougher enforcement

aim2misbehave17 − Report to your state department of labor.

The IRS is unlikely to act quickly, if at all, in this time of critical understaffing.

But state labor boards don’t mess around with this.

liptoniceteabagger − You should also report them to your state labor board.

The IRS will undoubtably take a long time to respond to this, if they even have the manpower to do so at this point.

Your state labor board on the other hand will likely respond fairly quickly.

StuffonBookshelfs − You can call your state labor department too!!

No-Display-6647 − You should report them to your state. They probably have an agency that will address this complaint faster.

This group explained worker misclassification rules and advised gathering proof and filing unemployment

NullGWard − So stupid of the employer. If they were demanding that you perform your work during certain specific hours,

that is one of the legal factors in determining whether a person is an employee versus an independent contractor.

Long_House8784 − File for unemployment. That will jump-start the process.

They’ll have to answer and prove as to why you weren’t an employee

amiecat123 − If you have any emails that you still have access to that show where they demanded you work certain hours,

use company equipment, work in a certain place, etc, save hard copies of them.

They’ll want proof of all of your claims. In my case, it was a contract.

My employer thought that as a contract employee, I needed to sign a contract stating hours, equipment, work location, rules, etc.

Quite contrary to actual contract labor!

This did allow me to file for unemployment when I was eventually terminated for calling these things out - hopefully you’re able to do that, too.

These commenters shared real cases where employers paid back wages, taxes, and penalties

Mryan7600 − My sisters former coworker did something like this.

She had been terminated for a bogus reason to make room for the office manager's daughter to work during the summer.

She also had printed copies of several emails that had stated that they knew they were supposed to pay

certain positions overtime, but were calling them exempt.

They had to pay something like 2,000 to several of their employees plus fees to the government.

Diggist080211 − I reported my employer for the same thing years ago.

He was trying to have his cake and eat it too by calling me a contractor and yet trying to treat me like an employee.

He had to pay my federal taxes after I quit AND that of other employees he was screwing over. Big money.

Domino8587 − I did this to my previous employer as well.

I worked for them for almost 2 years and they fired me for nothing, and I reported them for misclassification.

I’m in CO and going after them for unpaid wages and taxes they should’ve paid to the government.

saveable − For those of us who have not the foggiest notion of what those codes represent, how about a quick summary?

Most readers sided with the contractor, seeing the report as accountability rather than revenge. While some worried about collateral damage, many pointed out that systemic shortcuts only survive when no one challenges them.

Was filing the report a necessary stand or an unavoidable outcome of being pushed too far? How would you respond after being quietly cut loose like this? Drop your thoughts below.

Leona Pham

Leona Pham

Hi, I'm Leona. I'm a writer for Daily Highlight and have had my work published in a variety of other media outlets. I'm also a New York-based author, and am always interested in new opportunities to share my work with the world. When I'm not writing, I enjoy spending time with my family and friends. Thanks for reading!

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