Making the right determination is essential in avoiding undesired issues and penalties. Anyone who performs services for a business is an employee if the employer can control what will be done and how it will be done. What matters is that the employer has the right to control the details of how the services are performed. Facts that provide evidence of the degree of the control and independence fall into three categories-
1. Behavioral: Does the company control or have the right to control what the worker and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer such as how the worker is paid, whether expenses are reimbursed, who provides tools and supplies
3. Type of Relationship: Are there written contracts or employee type benefits such as pension plans, insurance, or vacation pay. Will the relationship continue and is the work performed a key aspect of the business.
No one factor stands alone in making this determination. The keys are to look at the entire relationship, consider the degree or extent of the right to direct and control, and to document each of the factors used in coming up with the determination.
