Employee or Independent Contractor: 10 ways to tell…

It’s important to know if you – or if someone you’re hiring – would be considered an employee or an independent contractor. This determines who will be held responsible for medical bills or lost wages should you get injured on the job. A number of factors are reviewed when evaluating your status. Here are some things to think about:

  1. Are you directed on how the work should be performed or simply the final product?
  • An employee will generally be directed on how a project should be completed, while an independent contractor will use his own methodology.
  1. Does the business provide training for you?
  • This indicates employee status.
  1. Are your services a substantial or integral part of the business?
  • This indicates employee status.
  1. Does the business require that you personally perform all services, or can you hire and pay your assistants?
  • Independent contractors may have the option of hiring other contractors to perform their work.
  1. Do you have profits and losses independent of the business?
  • This is an indication that you are running your own business as an independent contractor.
  1. Do you have an ongoing relationship with this business?
  • While you and the company may simply have a good working relationship, the IRS may view this as an indication of employee status.
  1. Do you set your own schedule and hours?
  • This suggest you’re an independent contractor.
  1. Are you required to work full-time?
  • This is an indication of employee status.
  1. Are you allowed to work for other clients? Do you provide your own tools and equipment?
  • This indicates that you are an independent contractor.
  1. Can the relationship be terminated at any time?
  • This suggests employee status. An independent contractor would only be discharged for failure to meet contract specifications; likewise, an independent contractor is under contract and cannot quit until the project is completed.
  • If you think you might be considered an independent contractor, you may need to carry workers’ compensation insurance. Building Blocks can help you get coverage quickly and easily. Get Started Now…
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