Download our December 2007 Newsletter here

Posted - January 28, 2007

Is that worker an Independent Contractor or an Employee?

The following series of questions can help you to determine whether a worker should be classified as an independent contractor or an employee. The more 'yes' answers you have, the more it suggests you should classify the worker as an employee rather than as an independent contractor. Answering 'yes' to even one question may be enough to raise a red flag with a tax auditor. The more 'yes' answers you give, the more likely that the IRS or state tax authority will reclassify the worker you treated as an independent contractor as an employee and make you liable for employment taxes, interest and penalties.

1.	Do you train the worker or require the worker's attendance at meetings?	Yes	No
2.	Do you have the right to supervise the worker or require the worker to submit regular reports?	Yes	No
3.	Do you hire, supervise and pay for the worker's assistants?	Yes	No
4.	Do you establish work routines and schedules or set the sequence of job tasks for the worker?	Yes	No
5.	Do you set the worker's hours?	Yes	No
6.	Do you pay the worker by the hour, week or month?	Yes	No
7.	Do you reimburse the worker's business and travel expenses?	Yes	No
8.	Do you own the tools, materials and equipment the worker uses to do the job?	Yes	No
9.	Does the worker perform all of his or her work in an office or workshop located within your community?	Yes	No
10.	Does the worker work for you on a full time basis or report exclusivley to your community?	Yes	No
11.	Is the worker paid the same amount regardless of how the job comes out?	Yes	No
12.	Did you rehire this worker after laying him or her off of previous emplyment with you?	Yes	No
13.	Are the workers services vital to your community's day to day operations?	Yes	No
14.	Can you discharge the worker at will?	Yes	No
15.	Can the worker walk away from the job before it's done without being subject to damages or penalties?	Yes	No