WORKER CLASSIFICATION
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. 

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