Independent Contractor Or Employee?

IRS AND STATE TAX AUTHORITIES WILL LOOK CLOSELY. ARE YOUR WORKERS PROPERLY CLASSIFIED?

It is not always easy to determine whether a particular worker is an “employee” or an “independent contractor”. There is no simple test. The courts consider a variety of factors, and the importance of any particular factor varies from court to court. A written contract with your workers will not protect you if the actual relationship is that of an employer and an employee.

The following statements are generally true if the worker is an independent contractor, rather than an employee. (Consult with legal counsel with particular situations and questions.)

• The worker provides services to more than one employer, either simultaneously or one after the other.
• The worker provides many or most of his or her tools and equipment and takes them away when the job is completed.
• The duration of the worker’s work for the employer is limited from the beginning, either to a particular length of time or to the completion of a particular project.
• The employer provides instruction only regarding the overall goals to be achieved and standards to be met, and it does not supervise the worker on a day-to-day basis.
• The worker is compensated on an hourly basis or a job completed basis, but not a salary basis.
• The worker does not receive employment benefits from the employer.
• The worker is not expected to follow the employer’s normal personnel policies and procedures.
• The employer does not provide workers’ compensation coverage for the worker.
• The worker brings his or her own expertise and education to the job and is not trained or educated by the employer.
• The employer does not control when, where and how the work is done. There are no specific hours of work.