The US regulations are terribly vague, depend heavily on facts-on-the-ground, and can turn on minutiea like who gets cake on their birthday (so not making that up). That said, even for a law which has more edge cases than a course on graph theory, this case is not a close call.

It largely comes down to whether or not you direct and control the manner with which these maids work, which he certainly does. He has his maids wear branded uniforms, gives them a set checklist to follow, and has them bring a bottle of wine to each first-time customer. The fact that his maids have their own clients and use their own cleaning supplies does work in his favor, but overall he's still on the wrong side of the divide.

I'm not an employment lawyer, but I have been through a state employment classification audit, and I am pretty confident his maids would be reclassified if he came under scrutiny.

The IRS has a 20 point "Independent Contractor vs Employee" checklist, and he falls on the wrong side of a number of these items: http://www.webster.edu/about/policy/independent_contractor_c...

I've been aware for a long time about the distinction between employees and contractors, and the basic idea is clear enough to me. However, the difference between contractors and vendors still baffles me.

I don't issue a 1099 to Staples for delivering office supplies (though I realize we dodged that bullet by a hair a couple years ago). However, I do issue one to a guy I find on CraigsList to redesign my web site. In that case the difference seems obvious. But where is the line?

Generally if a payment is made to a corporation or total payments are less than $600 for the year you don't have to issue a 1099.

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf