So it sounds like there are two problems:
You seem confused on how hourly pay and taxes work
Your boss sounds slimy
First off, a little education for you:
If you are getting paid 11 an hour, that is BEFORE taxes. It doesn't matter if you are 1099 or w-2, your gross income is 11 an hour. This is how you will negotiate wages, and if you were hired at 11 an hour, that's what you receive.
Now, you need to pay taxes on that $11 an hour. You need to pay Federal, Social Security and Medicare. Plus you need to pay state income tax if your state has that. Let's just pull numbers out of a hat and say 20% of your income goes to taxes. You now are receiving, in your pocket, $8.80 an hour. This is your net pay.
If you were receiving a 1099, you were an independent contractor. This means your employer doesn't withhold your taxes and it's your responsibility to pay them quarterly and yearly. The good thing is that you can claim a bunch of business expenses as deductions on top of your standard deduction.
If you are a w-2 employee, your employer withholds your taxes for you. The amount they withhold is determined by your W-4 (you can use http://www.irs.gov/Individuals/IRS-Withholding-Calculator to see what the proper withholding should be). You then file a tax return at the beginning of the year for last years wages. If you had your employer hold too much, you receive the difference. If your employer withheld too little, you owe the difference.
Now, if your Gross income (before taxes) was $1258, and the pay period you worked was 126 hours, then yes, you are getting paid $9.99 an hour. If you were promised $12 an hour, you should have been paid $1512 for the same month. Your paystub should show your hourly rate, and the number of hours for which you are getting paid.
Either your boss lied to you about the pay raise, or there is some mistake here. It's possible the Feburary pay cycle was messed up because you didn't switch to w-2 at the beginning of the month.
Talk to your boss, make sure he understands you are talking about your gross income, don't even bother talking about your after tax income and say you were promised $12 an hour gross. Show him your paystub, and work to rectify any mistakes.