Are Workers Employees or Independent Contractors?

Read the Warning First

Here are the famous 20 factors of sufficient control to determine if the worker is an employee or Independent contractor:

Instructions-Employees are given instructions as to when, where and how to do their work.

Training-Independent contractors use their own methods. Employees are provided training that enables them to perform in a particular manner.

Integration-Employee's services are integrated into the business operations.

Services Rendered Personally-Employees can't subcontract out work.

Hiring Assistants-Independent Contractor can hire, supervise, and pay his own assistants, Employees work with assistants hired by the company.

Continuing Relationship-Employees have a continuing relationship with employer.

Set hours of work-An Independent Contractor is the master of his own time. Employees follow a schedule set by their employer.

Full Time Work-Independent Contractor can work when he chooses.

Work Done on Premises-Employees work where designated by employer.

Order of Sequence set-Employees must work in the sequence set by the employer.

ORDER OR SEQUENCE SET. An employee may be required to perform services in the order or sequence set by an employer. This shows that the employee is subject to direction and control.

Reports-An employee submits reports to employer.

REPORTS. An employee may be required to submit reports to an employer. This shows that the employer maintains a degree of control.

Payments-Independent Contractors are paid by the job or by output. Employees are paid by the hour/week/month.

Expenses-Employees are reimbursed by employer for business expenses.

EXPENSES.

Tools and Materials-Employees are furnished needed materials by employer.

TOOLS AND MATERIALS.

Investment-Independent Contractor has a significant investment in the facilities he is using.

INVESTMENT.

Profit or Loss-Independent Contractors earn a profit or loss. They take the risk and the reward.

PROFIT OR LOSS.

Works for multiple firms-Independent Contractors provide their services to more than one person at the same time. Employees perform their services exclusively for one employer.

WORKS FOR MORE THAN ONE PERSON OR FIRM.

Offers services to general public-Independent Contractor makes his services available to the general public.

OFFERS SERVICES TO THE GENERAL PUBLIC. An independent contractor makes his services available to the general public.

Right to Fire-Independent Contractor can't be fired, so long as he is performing to specifications in his contract.

RIGHT TO FIRE.

Right to quit-Employees can quit their job at any time without incurring liability for failure to complete a job.

RIGHT TO QUIT.

Either an employer or employee, with or without the other's knowledge or assent, may request the IRS to make a determination as to whether or not a particular worker is an employee. To have the IRS make the determination, file with the District Director a Form SS-8, Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding.

Engagement Status Letter ~ WARNING!

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Bob Parrish CPA