Employee Vs Contractor Checklist

Behavioral Control Tests

□ Does company control when work is performed?
□ Does company control where work is done?
□ Does company dictate how work is completed?
□ Does company provide detailed instructions?
□ Does company provide training?
□ Does company evaluate process vs. just results?
□ Is worker required to follow company procedures?
□ Must worker attend company meetings?
□ Is worker supervised directly?
□ Must worker work full-time for company?
□ Can worker delegate tasks to others?
□ Assessment: More control = Employee

Financial Control Indicators

□ Does worker have significant investment in equipment?
□ Does worker pay own business expenses?
□ Can worker realize profit or loss?
□ Does worker advertise services publicly?
□ Does worker maintain business location?
□ Is worker paid hourly/weekly/monthly?
□ Does worker invoice for services?
□ Can worker work for multiple clients?
□ Does worker have business liability?
□ Does company provide tools/supplies?
□ Are worker’s expenses reimbursed?
□ Assessment: More independence = Contractor

Relationship Factors

□ Is there written contract defining relationship?
□ Does company provide employee benefits?
□ Is relationship permanent/indefinite?
□ Is work integral to company’s business?
□ Does worker receive paid vacation?
□ Can either party terminate at will?
□ Will relationship continue after project?
□ Does worker have job title?
□ Is worker integrated into organization?
□ Does worker have company email/cards?
□ Is worker listed in company directory?
□ Assessment: More integration = Employee

IRS 20-Factor Test

□ Instructions given to worker
□ Training provided
□ Integration into business operations
□ Services rendered personally
□ Hiring of assistants
□ Continuing relationship
□ Set hours of work
□ Full-time requirement
□ Work on premises
□ Order/sequence of work set
□ Oral or written reports required
□ Payment method (hourly/weekly vs. project)
□ Payment of expenses
□ Provision of tools/materials
□ Significant investment by worker
□ Profit or loss possibility
□ Working for multiple firms
□ Services available to public
□ Right to discharge
□ Right to terminate

Legal Compliance Check

□ Review federal classification rules
□ Check state employment laws
□ Verify tax withholding requirements
□ Assess workers’ compensation needs
□ Review unemployment insurance
□ Check minimum wage applicability
□ Verify overtime requirements
□ Review benefits obligations
□ Check discrimination law coverage
□ Assess FMLA applicability
□ Review union considerations
□ Document classification decision

Risk Mitigation Steps

□ Document all factors considered
□ Use written agreements
□ Be consistent in classification
□ Review classifications periodically
□ Maintain supporting documentation
□ Consider safe harbor provisions
□ Get professional advice if uncertain
□ Audit current classifications
□ Correct misclassifications promptly
□ Train managers on proper classification
□ Monitor for changes in relationship
□ Update as laws change