Painting Company here: Employees or Subs?
My Texas painting company has been operating with employees since we started. We offer benefits, WC, of course pay taxes, etc. Employees are expensive. Strangely enough, I have also found employee...
Forum Discussion
You’re hitting on the single biggest friction point in the trades. Balancing the overhead of a legitimate W-2 crew against competitors cutting corners with 1099 labor is brutal. You’re completely spot on about the motivation factor, too—when guys are paid by the hour, their incentive is to stretch the clock. When subs are paid by the job, their incentive is speed.
Before you make the pivot, just keep in mind that what those big franchises do is a massive legal tightrope. The IRS and state workforce commissions look at control. If you force 1099 subs to wear your shirts, follow your exact schedules, and use your tools, the state sees them as W-2 employees. The franchises get away with it because they have huge legal buffers, or they just haven’t been caught yet.
To protect your business and still stay competitive, I've found you really have two options:
1. Go True 1099 (And Let Go of the Reins)
If you switch to subs, you have to completely let go of the control. They must run their own legal businesses, carry their own insurance, and use their own gear. You can’t dictate their uniforms or their exact start times—you can only dictate the final deadline and the quality of the finished product.
2. Move to a W-2 "Piece-Rate" Model
Instead of ditching your employees, tie their hourly pay to budgeted hours. If I bid a job at 20 hours and my W-2 crew knocks it out beautifully in 15, they get a bonus for the hours saved. If they drag it out to 22, they just get their base hourly pay.
This completely shifts the team's mindset. It aligns their speed with your profitability, but you get to keep total control over your branding, uniforms, and the customer experience.