Worker Classification: Employee or an Independent Contractor?


From Business Know How — Jovana Jerinic discusses the importance of properly classifying a worker as an employee or independent contractor and provides guidance for determining if a worker is an employee.   Jovana writes:

It is very easy to determine a worker’s classification. If you answer “Yes” to one or more of the following questions, it is likely that the person is an employee.

1. Do you control when and where the person works?

If you can control the person’s hours and the place where the work is to be performed, then you are likely hiring an employee. Independent contractors usually set their own hours and work where they want (such as from home or at the business premises).

2. Do you specify which tools and equipment the person must use?

Usually employees use tools and equipment provided to them by their employer to complete his/her job, whereas contractors use their own. For example, a graphic designer that is responsible for purchasing his/her own software is more likely to be a contractor.

3. Does the person work only for you?

Independent contractors are free to market their services to others and to work for as many people as they want. If the person working for you is restricted from doing this, they’re probably an employee.

4. Are you paying the person regular wages?

Employees are typically paid salaries or hourly wages on a regular basis, whereas most independent contractors receive a flat fee for their services. However, there are certain professionals, such as attorneys, that charge clients by the hour even though they are clearly not employees.

5. Do you provide the person with employment benefits?

Employees are more likely to receive benefits like sick pay, vacation time, health and dental insurance, and 401(k) matching.

6. Did the person agree to work for you for an indefinite length of time?

Usually employees are hired to work for the employer indefinitely until either party willfully terminates employment. On the other hand, contractors are hired for a specified time period to complete the job.

7. Is the person’s job closely tied to the core operations of your company?

For example, an architecture firm that hires an architect to assist with projects is likely taking on an employee…..

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