What are some examples of employee and independent contractor determinations?
To determine whether an individual is an employee or an independent contractor under the common law, the relationship of the worker and the business must be examined. Facts that provide evidence of the degree of control and independence fall into three categories:
- Behavioral Control: Facts that show whether the business has a right to direct and control how the worker does the task for which the worker is hired. The amount of instructions given to the worker generally provide a good indication of status, including:
- When and where to do the work
- What tools or equipment to use
- What workers to hire or to assist
- What work must be performed by individual
- What order or sequence to follow
- The amount of training provided
- Financial Control: Facts that show whether the business has a right to control the business aspects of the worker's job. Common questions include:
- Extent of the worker's investment in the business
- Extent to which worker's services are available to the general market
- How the business pays the worker
- The extent to which the worker can realize a profit or loss
- Type of Relationship: Facts that demonstrate a formal relationship. Common questions include:
- Whether written contracts describe the relationship
- Whether the business provides employee-type benefits such as insurance or paid time off
- The permanency of the relationship - definite vs. indefinite
- Extent to which the services performed are integral to the day-to-day operations of the business