IRS's Tests to Determine Worker Status as

Employee or Independent Contractor

I.             Behavior Control:  Facts that show whether the business has a right to direct and control how the worler does the task for which for which the worker is hired, including the type and degree of:

                    a) Instructions the business provides the worker, and

                    b) Training the business gives the worker.

II.                   Financial Control: Facts that show whether the business has the right to control the business aspects of the worker's job. These include:

                              1.      Reimbursement of business expenses

2.      Extent of worker’s investment

3.      Extent to which worker makes services are available to the relevant market

4.      How the business pays the worker

5.      The extent to which the worker can realize a profit or loss (An independent contractor can make a profit or loss. An employee cannot).

       III.       Type of Relationship: Factors that show “type of relationship”  (as provided by the IRS                  in Publication 15A):

1.     Written Contracts describing relationship parties intend to create

2.     Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay or sick pay.

3.     The expectation of permanency of the relationship – is the worker hired with the expectation that the relationship will continue indefinitely rather than for a specific project or period?  If so, such expectation indicates an employer-employee relationship rather than independent contractor relationship.

                  4.     The extent to which services performed by the worker are considered a key aspect of                          the company’s regular business. The more important they are to company business, the                          more likely  the business will have right to direct and control worker’s activities, thus                          indicating an employer-employee relationship.