Heavy Highway Contractor

How do you handle paying your welder rig rent? We have a welder that is on our payroll (not contracted) on staff, and based upon the hours that he works, we pay him an hourly rate for "Renting" his welding rig which is not run through payroll, it is distributed as an AP check. Historically, my predecessors have sent our welder a W-2 for his time worked and a 1099 for the welding truck rent-- is this the correct way to handle it? Is there only one way to handle this? 

I'm following and would like to see how others are handling this as well.

How do you handle paying your welder rig rent? We have a welder that is on our payroll (not contracted) on staff, and based upon the hours that he works, we pay him an hourly rate for "Renting" his welding rig which is not run through payroll, it is distributed as an AP check. Historically, my predecessors have sent our welder a W-2 for his time worked and a 1099 for the welding truck rent-- is this the correct way to handle it? Is there only one way to handle this?