it is clear when workers are employees and not independent contractors. course hero

by Dr. Faye Bailey 8 min read

Background

In recent years, worker misclassification has become a hot topic for federal and state employment and labor agencies. For instance, in September 2014, the U.S. Department of Labor awarded a total of $10.2 million to 19 different states to fund worker misclassification detection and enforcement activities.

IRS 20 Factor Test

This article will focus on the IRS 20 Factor Test since it is a common test and the most extensive. The IRS test is designed to evaluate who controls how work is performed. Under IRS rules and common-law doctrine, independent contractors control the manner and means by which contracted services, products, or results are achieved.

Evaluation

The 20 factors used to evaluate right to control and the validity of independent contractor classifications include:

Independent Contractor Agreements

Businesses often think that signing an independent contractor agreement with their workers is enough. While it is important for all your independent contractors to sign these agreements before working with your company, this alone will not save a business from worker classification issues.

image