Tracking Subcontractor Hours: What You Can Ask a 1099 Crew to Do

01

Where the federal test stands in 2026

The federal rule for who counts as an independent contractor is in the middle of a change. According to a DLA Piper summary read on September 8, 2026, the Department of Labor stopped enforcing its 2024 independent contractor rule in 2025 (Field Assistance Bulletin 2025-1). On February 26, 2026 it proposed a replacement "economic reality" test. The proposal emphasizes two things: control over how the work is performed, and the worker's opportunity for profit or loss. Skill, permanence, and integration into the business are supplementary factors.

A proposed rule can change before it is final, but control is at the center of this one, and a contractor answers the control question every time a sub's crew shows up on site.

State tests can be stricter than the federal one, and the summary names California's ABC test as the example. If you work in California or another state with its own test, check that test as well as the federal one.

02

What control looks like on a job site

Misclassification can happen one reasonable decision at a time. You want the sub's people on site at 7 because your crew is there at 7, so you tell them 7. You want proof they were there, so you have them punch your clock. The clock has a geofence, so now their phones are inside it. By the third job, the sub's crew and your crew are doing the same work on the same schedule under the same rules, and the only difference is which tax form they get in January.

Each of those decisions is a piece of control. Here is the list to check yourself against.

• You set their start and end times each day, rather than agreeing on milestones and letting the sub decide who shows up when.
• You require their workers to punch your time clock, with your app on their phones, inside your geofence, with your clock-in photo on.
• You apply your break, lunch, and overtime rules to their hours, or you compute their overtime at all.
• You pay the sub's workers by the hour yourself, or you pay the sub an hourly amount that passes straight through with no chance for the sub to make or lose money on the job.
• You supervise how the work is done, and the sub's lead takes direction from your foreman instead of running the crew.
• The same people work only for you, week after week, doing the work your own crew does.

Any one of these can have an explanation, but the whole list together describes an employment relationship under the proposal's factors. The first five lines are about control over how the work is performed and the opportunity for profit or loss, the proposal's two main factors. The last line is about permanence and integration, two of the supplementary factors.

03

What you can ask a sub for

You still need numbers from the sub. You have a bid to hold the sub to, a progress bill to check, and a job cost to report, and every one of those needs hours. The difference is whose records they are.

Hours by job are the normal thing to ask for, and a sub billing time and materials has to record them anyway. Ask for them per job and per day, in the sub's own format, with the sub's crew lead's name on them. That gives you the number for labor cost per job and for the bid comparison in our job costing for small contractors post, without your app on anyone's phone.

A daily log from the sub's lead says who was on site, what got done, and what was waiting on you, in the sub's words. A signed time ticket, countersigned by your foreman the same day, settles the hours before the invoice arrives. A clause in the subcontract should say that hours are reported for job costing and progress billing only, and that the sub controls its own crew's schedule, breaks, and pay. That puts the reason for the reporting in writing where it can be read later.

04

The safe pattern, step by step

1. 1Put it in the subcontract: hours are reported by job for progress billing and job costing, the sub controls its own crew's hours, breaks, and pay, and the sub's lead signs each report.
2. 2Pick the format once: a daily log or a time ticket per job with the job name, the date, the sub's crew count, the hours, and the lead's signature.
3. 3Have your foreman countersign time-and-materials tickets on site the same day, so a disagreement about hours surfaces before the invoice does.
4. 4Enter the sub's hours by job in your job cost file next to the sub's invoice, and keep them out of your payroll clock.
5. 5Compare the sub's reported hours against the invoice and against your bid at the end of each phase, and take any gap up with the sub, never with the sub's workers.

Step five keeps the relationship straight. If the hours look high, that is a conversation with the sub about the price of the next phase. Telling the sub's workers how long a task may take is control over how the work is performed, which is the first factor in the proposal.

05

What misclassification costs

If the sub's workers are found to be your employees, the consequences land in three places at once: wage-and-hour, tax, and insurance. The exact exposure depends on your state and on how long the arrangement ran, which is why the right person to ask is your attorney or CPA. A written subcontract plus the sub's own hour records are the two things you will want to be able to show.

06

What this looks like in Clox

Clox is an employee time clock. Punches, geofenced worksites, schedules, overtime thresholds, approvals, and payroll exports are built around people you employ. Use it for your W-2 crew.

Don't invite a sub's workers into your workspace and hand them the app; a geofence and a required scheduled shift on a 1099 worker's phone is exactly the control this post is about. Our general contractor guide covers how a GC runs its own crew in Clox, and tracking hours across multiple job sites covers the punches.

For the sub's hours you have two options. The first is to hold them inside Clox as a separate project. Every hour in Clox is tagged to a project and task, with clients and categories, and labor cost per job is a number on the Reports page. You can create a project named for the sub, or a category that groups all subcontract work, and add the sub's reported hours to it yourself. The job's total on the Reports page then includes sub labor next to your own crew's hours.

That keeps every labor number for a job in one report. It also means typing in hours that came from someone else's records, on an account in your workspace. Every one of those entries is a manual entry in your audit log rather than a punch. The projects, clients, and tasks article covers how projects and categories flow into reports.

The second option is cleaner: keep sub hours out of the clock entirely. Clox holds your own crew's hours by job, and the sub's hours live on their signed tickets and their invoice. The two meet in your job cost spreadsheet or your accounting file, where sub labor is one cost line and your crew's labor is another. Every record in Clox stays a real punch by a person you employ, which is the state you want your records in if anyone ever asks who was an employee. Bidding from your own labor data also depends on knowing which hours were your crew's.

07

FAQ

This is general information, not legal advice. Talk to your attorney or CPA before you change how anyone on your jobs is classified, in either direction, and before you put anyone who isn't on your payroll onto your time clock.

Clox is free for 14 days, asks for no credit card, and backs the first paid subscription with a 30-day money-back guarantee. Start a free trial, add your own crew and your jobs, and leave the sub's hours on the sub's tickets.