How to Classify Worker - Independent Contractor or Employee - John R. Dundon II, Enrolled Agent
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How to Classify Worker – Independent Contractor or Employee

How to Classify Worker – Independent Contractor or Employee

The IRS uses the common-law factors listed below to determine whether a worker is an independent contractor or an employee. All the factors below must be taken into consideration in determining worker classification

  1. Instructions. An employer should not tell an independent contractor how to do a job.

  2. Training. An employer should not provide substantial training for an independent contractor.

  3. Integration. An independent contractor should not be hired to provide a service that is an essential part of an employer’s business.

  4. Personal Services. An employer should not insist that the work be performed by the contractor rather than someone that the contractor may hire.

  5. Assistance. Independent contractors control and pay their assistants.

  6. Length of relationship. Independent Contractors should not have a continuing relationship with an employer unless there are multiple contracts.

  7. Work hours. An independent contractor usually determines the hours worked to complete a job.

  8. Amount of work. An independent contractor should not be told to work fulltime for an employer if that would prevent the contractor from doing other work.

  9. Location. Unless ther services can be performed only in one location, an independent contractor chooses where to do the work.

  10. Sequence of work. Independent contractors determine the order in which they are to accomplish tasks.

  11. Reports. Independent contractors should not be required to produce interim reports.


  12. Independent contractors are paid for the results of their work, not for the time worked.

  13. Expenses. Independent contractors are responsible for their business expenses.

  14. Tools. Independent contractors are typically provide their own equipment and tools.

  15. Investment. An independent contractor has a significant investment in his business.

  16. Profit. Independent contractors realize profits and incur losses on each job.

  17. Multiple jobs. Independent contractors can work for more than one employer at a time.

  18. Availability. Independent contractors usually can make their services available to the general public as the wish.

  19. Termination. Independent contractors can not usually be fire at will, as can employees.

  20. Liability. Independent contractors are liable for failure to complete a job.