More detailed instructions make it more likely that the worker is an employee. The more detailed the instructions given, the greater the degree of control the business exercises over the worker. Giving these types of instructions to a worker makes it more likely that the worker will be treated as an employee, rather than as an independent contractor.ĭegree of instruction. The instructions may include what tools or equipment to use, what workers to hire or to assist with the work, where to purchase supplies and services, what tasks must be performed by which specific individuals, and what order or sequence to follow when performing a task. A business generally gives an employee specific instructions about when, where and how to work. In one situation certain factors may dominate the determination and in another situation those same factors may have little or no relevance to the determination.ĭo the facts show that your business has a right to direct or control the worker? A worker is generally an employee when the business has the right to direct and control his work, even if the business does not actually exercise the right to direct or control how the work is done. No single category is more important than the others in all situations, but the factors given are also not necessarily equal weight. The facts that must be weighed in evaluating the degree of control and independence fall into three general categories: behavioral, financial, and type of relationship. In fact, to determine whether a person providing a service to your business is an employee or an independent contractor, you must look at the degree of control that you exercise over the person. Many business owners mistakenly believe that they may simply choose to designate a person as an independent contractor rather than as an employee, and that is the end of the inquiry. a statutory employee (certain independent contractors who, by law, are treated as employees).independent contractor", there are really four possible classifications for a worker: If the person is determined to be an employee but you have treated him or her as an independent contractor, it can be a costly mistake for your business.Īlthough the distinction is generally characterized as "employee vs. The independent contractor is responsible for paying his own income taxes, Social Security and Medicare taxes. On the other hand, if the person is an independent contractor, you do not need to withhold or pay any taxes on your payments to him or her. If the person is an employee, you must withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment taxes on the wages you pay. As a business owner, it is very important for you to correctly determine whether a worker who provides services to you is an employee or an independent contractor.
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