The Paint Kings, Inc President and CEO Eddie O’Hair, offers insight into employee misclassification and how it could affect Arizona homeowners
This spring, Governor Katie Hobbs quietly signed Executive Order 2026-01, directing the Department of Economic Security, the Department of Revenue, the Industrial Commission of Arizona, and the Registrar of Contractors to start sharing information and coordinating enforcement against companies that misclassify employees as independent contractors. It was a meaningful step — for the first time, a finding of misclassification by one agency won’t just sit in a file; it can trigger action from all four. But nearly half a year later, most people in the residential and commercial painting industry have never heard of it. The order was signed behind closed doors, covered briefly by a handful of legal blogs, and then the conversation moved on. On the ground, in the industry where this problem may be most widespread, nothing has changed.
That industry is painting. And the practice at the center of it is one that has become so normalized that many business owners no longer think of it as a workaround — they think of it as how the business runs.
The 1099 shortcut
Running a painting crew as W-2 employees is expensive. Between workers’ compensation premiums, unemployment insurance, payroll taxes, and — increasingly — the expectation of paid time off and health benefits, labor costs have climbed sharply in the last several years. Faced with that math, a growing number of painting companies have simply stopped hiring painters as employees. Instead, painters are brought on as “independent contractors” and paid on a 1099.
On paper, that sounds like flexibility. In practice, it usually isn’t. These painters show up to the same job site at the same time every morning, just like an employee. They ask their supervisor for time off, and represent the company to homeowners, just like an employee. The only major difference is they don’t wear the company’s shirts or drive up in the company’s marked vehicles, or have the protections a W2 employee. Under Arizona and federal law, none of that describes an independent contractor — it describes an employee, regardless of what the paperwork says. Misclassification isn’t determined by the label on a form; it’s determined by who controls the work.
A second, less-discussed problem: licensing
There’s a related issue that gets even less attention, and it’s arguably more serious for homeowners: most of these 1099 painters aren’t licensed contractors at all. Under Arizona law, if a job involves more than $1,000 in labor and materials or requires a permit, the person or company doing that work generally has to hold a Registrar of Contractors license. A painting company’s own license does not extend down to the people it pays as subcontractors. Each subcontractor performing licensable work is supposed to be separately licensed.
A lot of business owners either don’t know this or would rather not know it. The assumption seems to be that as long as the company itself is licensed, everyone working under its name is covered. That assumption is wrong, and it means a substantial amount of residential and commercial painting work in Arizona is being performed by people who, legally, aren’t allowed to be doing it as independent operators.
Who actually carries the risk
The shift from W-2 to 1099 isn’t cost-neutral — it’s cost-shifting. Every expense a company sheds by moving a painter onto a 1099 gets picked up by someone else, and that someone else is usually the painter.
A W-2 employee is covered by the company’s workers’ compensation policy if they’re hurt on the job. A 1099 worker typically is not — and if that worker doesn’t carry their own coverage, a fall off a ladder can mean medical bills with no safety net behind them. A W-2 employee has payroll taxes withheld automatically. A 1099 worker owes self-employment tax on top of income tax, often without realizing the total until they file. A W-2 employee may have access to unemployment insurance if the work dries up. A 1099 worker generally doesn’t.
The painful part is that most of these workers don’t find any of this out until it’s too late — until they’re hurt, or until tax season, or until they get laid off with no unemployment claim to file. They took a job. They didn’t sign up to be a small business owner absorbing risk that used to belong to their employer, but that’s effectively what happened.
What this means for homeowners
Homeowners hiring a licensed Arizona painting company rarely think to ask who is actually going to be on their property. When a company hires a 1099 employee they make them sign a worker’s comp waiver releasing the company from liability if they are injured on the job. But those waivers don’t transfer to the owner of the property they are working on. If a company sends unlicensed 1099 subcontractors to do work that requires a license, the protection the homeowner thought they were getting by hiring a licensed painting contractor can disappear along with it. Arizona’s Registrar of Contractors offers real recourse — recovery funds, complaint processes, license accountability — but that recourse generally exists for work done by licensed contractors. Hire, even unknowingly, an unlicensed sub working under someone else’s name, and a homeowner can find themselves with no ROC complaint to file and no bond to draw against if the work is shoddy or someone gets hurt on their property.
Before hiring any painting company, homeowners should ask directly: are the people doing this work employees or subcontractors, and if they’re subcontractors, are they individually licensed? A company unwilling to answer that clearly is telling you something.
A start, not a finish
Governor Hobbs deserves credit for getting Arizona’s enforcement agencies talking to each other. That’s a real, if quiet, first step. But an executive order that most of the industry hasn’t heard of six months later isn’t accountability yet — it’s a promise of accountability. Arizona homeowners and construction workers alike need to understand what’s happening in this industry now, not wait for enforcement to eventually catch up. Until it does, the risk that painting companies have shed by going to a 1099 model hasn’t disappeared. It’s just been quietly handed to the people with the least ability to absorb it.