How do you know if you're an independent contractor

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Behavioral Factors

Does the employer give instructions to you, monitor and supervise your work, directs what work must be completed or the manner in which work is performed. Giving instructions does not automatically turn a working arrangement into an employment relationship, but the degree to which instructions are given and followed, and the nature of the instructions given will provide guidance. The more instructions an employer gives, and the more detailed the instructions, the more likely the worker is an employee. In addition, if an employer provides a worker with training, this supports the argument that the worker is an employee rather than an independent contractor.


Financial Factors

There are certain tell-tale financial signs that a worker is functioning as an independent contractor rather than an employee. For example, if the worker buys his own uniform, safety equipment, or tools, or uses his own motor vehicle to perform work or conduct business, he is more likely a contractor. If he is paid a flat fee or a lump sum for a job, he is more likely a contractor. Out-of-pocket costs and expenses are routinely reimbursed by employers to employees through their expense accounts or other reimbursement systems, but contractors generally assume those expenses as part of their job costs.


Employment Benefits

Because contractors have the general right to work for as many businesses as they wish, and can perform work according to their own schedules, it makes no sense for a contractor to receive vacation pay, sick leave or retirement benefits. So, when a worker enjoys paid vacations, pension plans, health insurance benefits, sick days or disability coverage, he is more than likely working in the capacity of an employee.


Relationship Formalities

Even though the most clearly written contracts are not considered conclusive as to the nature of a working relationship, express language concerning employee or independent contractor status can be persuasive. For example, language which sets a termination date for the relationship or a finite term for the performance of a specific job would suggest a contractor relationship. The extent to which a worker's services form an integral part of the employer's management process or its decision-making pattern also reveals whether a court is likely to regard the worker as an independent contractor or an employee.

Additional Resources

What the IRS says about Independent Contractors

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