EMPLOYEES OR INDEPENDENT CONTRACTORS (cont.)

However, if you pay the roofer based on hours worked with a maximum and minimum expected each week and preclude his working for others, you are controlling the service being performed for you including what will be done and how it will be done. Under the common law standard it matters not that the employee has freedom of action but only that you have the right to control the “details” of how this work is performed. Sound scary? Well it should be. Additional common law considerations distinguishing the independent contractor and employee would be: 1. when and where do they work, 2. who directs the order and sequence of their daily work, 3. whether their individual work is specified by someone working for the business for which the work is performed, 4. whether the worker supplies his own tools and equipment, 5. do they hire others to assist them, and 6. who determines the “profit” the worker can make.

These common law considerations direct our focus to the Twenty Factor Test of the IRS. Described below are the factors the IRS considers when deciding whether the individual should be classified as an employee or an independent contractor:

1. Instruction: An employee is told when, where and how to do the job. An independent contractor is given latitude and is primarily measured by the final product result.
2. Training: An employee is generally trained by the employer to perform job tasks. An independent contractor usually comes with the skills necessary to complete the task.
3. Integration: An employee’s services are generally an integral part of the success of the business. The independent contractor’s services are generally task or project oriented.
4. Services Rendered Personally: An employer is usually interested not only in the job being completed, but more specifically in who does it and how it is done. This indicates the employer is interested in the results as well as the methodology.
5. Hiring Assistants: An independent contractor can hire personnel as needed to complete the task, without the contracting agency’s permission. An independent contractor must pay these personnel directly.
6. Continuing Relationship: An employee has an ongoing relationship with the employer. A seasonal relationship is considered a continuing relationship.
7. Set Hours of Work: An employee generally works set hours that are established by the employer. An independent contractor generally will set his or her own hours.
8. Full Time: An employee generally works full time. An independent contractor works as much or as little as necessary to complete the contracted task within the allotted time.
9. Work Done on Premise: Work done on the employer’s premises usually indicates control, particularly if the nature of the work is such that it could be done off-site.

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