To determine whether a worker is an independent contractor or an employee, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered. The facts that provide this evidence fall into three categories: Behavioral control, financial control, and the type of relationship itself.

• Behavior control covers the facts that show whether the business has a right to direct and control how the work is done, through instructions, training, or other means. When and where to do the work, what tools or equipment to use, what workers to hire or to assist with the work, where to purchase supplies and services, what work must be performed by a specified individual, or what order or sequence to follow.

• Financial control covers facts that show whether the employer or business has a right to control the business aspects of the worker’s job. This includes the extent to which the worker has un-reimbursed business expense, the worker’s investment in the business, and how the business pays the worker.

• Facts covered by Type of Relationship include written contracts describing the relationship the parties intended to create, the extent to which the worker is available to perform services for other similar business, whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay, and the permanency of the relationship.

If the employer or the employee is still undecided of whether they are an employee or an independent contractor, the IRS has a form SS-8, which is a Determination of Worker Status form that is completed by the employee/employer and sent to the IRS for them to determine the status.

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