If my employer forced all employees to go from W2 to 1099, is that legal?

Question Details: Were were all employees for 2 years. We received W2's for 2 years ago but owner had filed reports late and was behind in payroll taxes. When it came time to do W2's for last year she told us all we were going to be 1099 employees. We had never been told this and nobody expected to get a 1099. She told us that she would pay us the difference between gross/net for last year from her personal account to help cover self employment tax if we all agreed to accept a 1099. It was either that or she would close the doors. So to keep our jobs we all agreed. Was this legal what she did?

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