When an independent consultant works for an hourly rate, it is usually a pretty simple arrangement.  The type of relationship is defined (i.e. W2 employee, or 1099 independent contractor) in writing and then both parties sign it.

The particulars include the standard hourly rate, weekly hours cap if any, and how overtime work shall be billed (whether time and a half, straight time, etc…).  And the type of relationship carries with it implications for obligation and taxation.  W2 means that the worker is an employee, and that the employer is required to pay employment taxes on that person.  Whereas 1099 means that the worker is an independent contractor, and merely provides a service in exchange for the agreed-upon pay schema.

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