EMPLOYEE OR INDEPENDENT CONTRACTOR
Worker classification determinations are made on a case by case basis, depending on the specific facts and circumstances. How do you know how to classify? The basic definitions are:
1) Employee-an individual who performs services for a firm who is subject to
their control regarding what work will be done and how it will be done.
2) Independent contractor-an individual who performs services for a firm-but controls only the result of the work.
The categories of evidence are:
1) Behavioral control
2) Financial control
3) Relationship of the parties
Behavioral control is determined by:
1) Type of instruction given
2) Degree of instruction
3) Evaluation systems
4) Training provided by business
Financial control is determined by:
1) Significant investment
2) Unreimbursed expenses
3) Opportunity for profit or loss
4) Method of payment
Relationship of the parties is determined by:
1) Is there a written contract?
2) Are employee-type benefits provided?
3) Permanency of the relationship?
4) Are services provided a key activity of the business?
What if you are still not sure of worker classification? You can file a FORM SS-8 with the IRS and the IRS will determine your classification.