MIME-Version: 1.0 Content-Location: file:///C:/26F97105/IndependentContractororEmployee.htm Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" Independent Contractor or Employee

Independent Contractor or Employee ?

To determine whether a worker is an independent contractor or an employee under common law, you must examine the relationsh= ip between the worker and the business. All evidence of control and independence in this relationship should be conside= red.

The facts that provide this evidence fall into three categories - Behavioral Control, Financial Control, and the Type of Relationship itself.

Behavioral Control covers facts that show whether the business has a right to direct and control how = the work is done through instructions, training, or other means.

Financial Control covers facts that show whether the business has a ri= ght to control the financial and business aspects of the worker's job. This includes:

  • The = extent to which the worker has unreimbursed busin= ess expenses,
  • The = extent of the worker's investment in the facilities used in performing servic= es,
  • The = extent to which the worker makes his or her services available to the relevant market,
  • How = the business pays the worker, and
  • The = extent to which the worker can realize a profit or incur a loss. <= /span>

Type of Relationship includes= :

  • Writ= ten contracts describing the relationship the parties intended to create, =
  • The = extent to which the worker is available to perform services for other, similar businesses,
  • Whet= her the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay,
  • The permanency of the relationship, and
  • The = extent to which services performed by the worker are a key aspect of the regu= lar business of the company.

If payment for services you provided is listed in Box 7 of Form 1099-MISC, you are being treated as a self-employed worker, also referred to as an independent= contractor, whereas if your income is being reported on a W-2 you are viewed as an employee.

 

To be an independent contrac= tor you do not necessarily have to "have a business," but simply perf= orm services as a non-employee to have your compensation treated this way.

 

The final determination is complex, but is essentially made by examining the right to control how, whe= n, and where you perform those services. It is not based on how you are paid, = how often you are paid, or whether you work part-time or full-time.<= /span>