Contractor Versus Employee Checklist

Control Factors

□ Who determines work hours?
□ Who sets the work location?
□ Who provides detailed instructions?
□ Who determines work methods?
□ Who sets deadlines and priorities?
□ Is there direct supervision?
□ Who controls the work sequence?
□ Are there required meetings?
□ Is approval needed for decisions?
□ Who evaluates performance?
□ Can worker decline assignments?
□ Is training provided/required?

Financial Arrangements

□ How is payment structured (hourly/project)?
□ Who provides tools and equipment?
□ Who pays for supplies?
□ Are expenses reimbursed?
□ Is there opportunity for profit/loss?
□ Can worker work for others?
□ Who bears financial risk?
□ Are benefits provided?
□ Is paid time off given?
□ Are taxes withheld?
□ Is there a guaranteed wage?
□ Who sets the pay rate?

Relationship Type

□ Is there a written contract?
□ What is the duration of relationship?
□ Is the work ongoing or project-based?
□ Is the worker integral to business?
□ Can either party terminate at will?
□ Are similar workers employees?
□ Does worker have own business?
□ Does worker advertise services?
□ Is worker available to public?
□ Does worker have multiple clients?
□ Is there exclusive arrangement?
□ What is industry standard?

Behavioral Indicators

□ Who sets work standards?
□ Is uniform or dress code required?
□ Must worker personally perform work?
□ Can worker hire assistants?
□ Who trains any assistants?
□ Who pays assistants?
□ Is worker subject to discipline?
□ Must worker follow procedures?
□ Who owns work product?
□ Are company resources used?
□ Is non-compete required?
□ Is worker listed as employee?

Legal Tests

□ Does worker pass IRS 20-factor test?
□ Does arrangement meet state law?
□ Is worker properly classified for tax?
□ Are labor laws being followed?
□ Is workers’ comp required?
□ Does worker have business license?
□ Is worker incorporated/LLC?
□ Does worker have insurance?
□ Are contracts properly structured?
□ Is documentation maintained?
□ Have audits been considered?
□ Is legal advice needed?

Risk Assessment

□ What is misclassification penalty?
□ Are there previous violations?
□ Is arrangement clearly documented?
□ Would arrangement pass audit?
□ Are similar workers consistent?
□ Is there regulatory scrutiny?
□ What is financial exposure?
□ Are there union considerations?
□ Is insurance coverage adequate?
□ Have complaints been filed?
□ Is reclassification needed?
□ Should legal counsel review?

Documentation Required

□ Written agreement specifying status
□ Business license verification
□ Insurance certificates
□ Tax identification numbers
□ Invoice requirements
□ Statement of work
□ Independent contractor agreement
□ W-9 or W-4 form
□ I-9 verification
□ Confidentiality agreement
□ Intellectual property assignment
□ Compliance certifications

Decision Factors

□ Weight control factors
□ Evaluate financial aspects
□ Consider relationship type
□ Review behavioral indicators
□ Apply legal tests
□ Assess risks
□ Document decision rationale
□ Implement appropriate structure
□ Monitor ongoing compliance
□ Review periodically
□ Adjust if needed
□ Maintain documentation