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It’s not uncommon for service companies to bring on technicians as independent contractors — issuing them a 1099 at the end of the year. On the surface, it seems practical, especially since there’s no licensing or formal training for commercial espresso equipment. This practice however, carries serious legal and financial risks that can ultimately harm the service company.

When a company hires someone and directs when, where, and how they work, that person is legally considered an employee, not a contractor. In that case, the company must withhold taxes and contribute to Social Security and Medicare. Failing to do so is misclassification — and it’s illegal. Penalties can include back taxes, fines, and interest.

The only businesses you can legitimately subcontract and issue a 1099 to are other licensed service companies that offer the same or similar services as you do — in other words, your competition. True subcontractors operate as independent businesses with their own licenses, insurance, and tax responsibilities.

The Ownership Risk

One of the most overlooked dangers of misclassifying technicians is the potential for ownership disputes. If a service company pays an individual as an independent contractor but manages them like an employee — setting their schedule, pricing, or representing them as part of the company — that technician could later argue they were, in fact, working toward ownership or functioning as an implied partner.

There have been cases in other trades where misclassified workers claimed partial ownership or demanded compensation for helping build a company’s client base or reputation. If the technician can prove they were treated as part of the company’s structure without proper employment status, the business itself can be at risk.

Repair-Based vs. Full-Service Companies

In the commercial espresso service industry, there’s a bigger issue at play. Many espresso “service companies” focus their resources solely on repairs — responding to breakdowns and billing for time and materials. But a company positioned for long-term growth balances equipment sales with ongoing customer support that extends beyond installations and repair calls.

Profits from equipment sales help offset the cost of training new technicians and absorbing the inevitable mistakes that come with both new hires and the everyday challenges of commercial espresso service. Selling equipment is how a service company grows responsibly — by reinvesting profits into inventory, tools, and people, and by giving technicians a chance to learn under proper employment.

Relying only on repair work often pushes companies toward shortcuts, like misclassifying workers to cut costs. Combining equipment sales and service creates a stronger, more sustainable business model — one that supports training, builds stability, and grows long-term customer relationships.

In Summary

Paying technicians on a 1099 might seem easier in the short term, but it exposes companies to legal, financial, and even ownership risks — while leaving technicians unprotected. The better path forward is to develop full-service companies that sell, install, and maintain equipment, using the profits from those sales to support training, growth, and long-term stability.

That’s how we strengthen the industry, protect our technicians, and ensure customers receive reliable service from professionals who are invested in their craft.