Determining Employee Vs. Independent Contractor Status
1. Instructions – Direction and Control. Employees generally follow instructions about when, where and how work is to be performed; contractors establish their own hours and have no instructions regarding how the job should be completed.
2. Training. Employees typically receive training via classes and meetings regarding how services are to be performed; contractors generally establish their own procedures and receive no training.
3. Services rendered personally. Services are typically performed personally by the employee; contractors may utilize others to perform job tasks and duties.
4. Supervision. Most employees are supervised by a foreman or representative of the employer; contractors generally are not.
5. Set hours of work. An employee’s hours and days are set by the employer; contractors dictate their own time and are often retained to complete one particular job.
6. Full time required. An employee typically works for only one employer; contractors may have several jobs or work for others at the same time.
7. Work on premises. Employers work on the premises of an employer or on a route or site designated by the employer; contractors typically work from their own premises and pay rent for their own premises.
8. Manner of payment. Employees are generally paid in regular amounts at stated intervals; contractors are paid upon the completion of the job or project, in a lump sum or other arrangement, such as on a commission basis.
9. Furnishing of tools and materials. Employees are usually furnished tools and materials by employers; contractors typically furnish and pay for their own tools, materials and expenses.
10. Profit. Employees generally receive no direct profit or loss from work performed, while contractors do.
11. Job security. Employees may be discharged or quit at any time without incurring liability; contractors are typically discharged after a job is completed and are legally obligated to complete a particular job to avoid liability.
For further answers pertaining to this subject, contact Ronald J. Cappuccio, J.D., LL.M. (Tax) by calling 856-665-2121 or send us an email.