Are You an Independent Contractor or an Employee?

By Daniel Taylor, Esq. on January 27, 2015 | Last updated on March 21, 2019

Determining whether you're working as an employee or an independent contractor is about a lot more than just knowing what to call yourself.

Although independent contractors and employees may often perform similar types of work, even working side by side, there are a number of legal differences between the two. How you're classified can have a profound effect on employment benefits, taxes, and legal liability issues.

How can you tell whether you're an employee or an independent contractor?

It's What You Do, Not What You're Called

You may assume that whether you're considered an employee or an independent contractor is determined by the person signing your checks. But your legal employment status is not determined by what you're called, but rather what you do and don't do as part of your employment.

The existence of a valid employment contract or independent contractor agreement will certainly be one factor in determining a worker's employment status, but there are many others. Generally, the more control an employer has over a worker, the more likely that worker is to be considered an employee as opposed to a contractor, no matter what he or she may be called in a contract.

IRS Looks at 20 Factors

The Internal Revenue Service has created a list of 20 important factors it considers when determining an individual's employment status. These include:

  • Full-time dedication. If a worker is expected to be dedicated full-time to a business, that person is more likely to be considered an employee.
  • Training. Employees are more likely to be trained.
  • Furnishing one's own tools. A worker who is required to furnish his or her own tools and materials is more likely to be a contractor.
  • The ability to hire, supervise assistants. A person who has the power to hire, fire, and supervise paid assistants is more likely to be considered an employee.
  • Instruction. Employees are generally given instructions on how to perform work while contractors typically are not.

Learn more about independent contractors v. employees, the hiring process, wage laws, and more at FindLaw's section on Employment Law.

Related Resources:

Copied to clipboard