When is an independent contractor really my employee?

Ask yourself: “Can I really say this worker operates their own business separate and distinct from mine?” If your gut answer to that question is “No,” you probably have an employee, not an independent contractor.

But you don't just h ave your gut to guide you. Determining employee versus independent contractor status is a fact intensive inquiry, so look at the facts of your case. The most important factor is whether the hiring party has the right to control the manner and means by which the work is accomplished. However, there are other considerations that come into play, such as : (1) skill set required; (2) source of instruments and tools; (3) location of the work; (4) duration of the work relationship; and (5) whether the work is part of the hiring party's regular business.

The more factors you have that wiegh in favor one way or the other, the mor elikely it is that a court would decide that your hired party has that status. Many states, such as California, apply a similar test. Note: the fact that you have a written independent contractor agreement with your hired part is not conclusive either. Just because your written agreement says, “The parties agree their legal relationship is one of ‘independent contractors,’ and not ‘employer-employee,’” isn’t sufficient as far as the federal or state authorities are concerned. (Read an informative article on How Employee Policies and Contractor Agreements Protect Your Business)

Also be aware that, just because one administrative body agrees with your analysis, does not mean another will. The test is different whether you are talking to the federal Department of Labor, IRS or EEOC, or your friendly neighborhood state watch dog authority such as the labor commissioner, taxing authorities, anti-discrimination agency, or workers’ compensation board. Click here for an article on the criteria the courts use in deciding the difference.