Searcher Compensation 1099 vs. w2

Are there any reasons why an investor group would be uncomfortable paying a searcher / CEO a 1099 salary vs. a W2 salary?

The pro for 1099 is that the searcher can likely be more tax efficient with that income vs. W2. Just wondering if a 1099 structure creates any issues related to employment agreements, non compete rules, and any other legal considerations.

Thanks!