The IRS has three tests, for workers classification each made up of multiple factors.

Behavioral Control covers facts that show if the business has a right to direct and control what work is accomplished and how the work is done, through instructions, training, or other means.

Instructions – an employee is generally told:

  1. when, where, and how to work
  2. what tools or equipment to use
  3. what workers to hire or to assist with the work
  4. where to purchase supplies and services
  5. what work must be performed by a specified individual
  6. what order or sequence to follow

Training – an employee may be trained to perform services in a particular manner.

Financial Control covers facts that show if the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:

  • The extent to which the worker has unreimbursed business expenses
  • The extent of the worker’s investment in the facilities or tools used in performing services
  • The extent to which the worker makes his or her services available to the relevant market
  • How the business pays the worker, and
  • The extent to which the worker can realize a profit or incur a loss

Relationship of the Parties covers facts that show the type of relationship the parties had. This includes:

  • Written contracts describing the relationship the parties intended to create
  • Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
  • The permanency of the relationship, and
  • The extent to which services performed by the worker are a key aspect of the regular business of the company

Creating a written policy stating the worker is an independent contractor is not determinative.  The facts of the case

 

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