If she puts them on payroll, she also can Reimburse them for those costs, per the IRS regulations that apply to each specific type of cost.

So, it doesn't Hurt them; it Helps them.

If you do backup withholding on notification of the requirement, which is Income tax (not FICA), then you send it along, but not reporting on 941/944. I would never do voluntary withholding for 1099 workers; they should be making their own Quarterly payments or otherwise meeting their own safe harbor obligation. You don't know their personal financial tax reporting needs.