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Federal

Author: Robert W. Wood, Wood LLP

Summary

  • Independent contractors allow employers to avoid the cost of payroll taxes and the burden of complying with certain employment laws in return for giving up some control over how, when and where work is performed. But not all workers can be independent contractors. See Overview.
  • There is no single test for determining whether a worker is an employee or an independent contractor. There are several factors that employers should consider when classifying workers. These criteria are not uniform, but they are generally consistent. See Determining Whether a Worker Is an Employee or an Independent Contractor.
  • There are several concerns involved in hiring and managing independent contractors, such as drafting sound independent contractor agreements and fulfilling tax-reporting requirements. See Hiring and Managing Independent Contractors.
  • Employers may sometimes have to reclassify independent contractors as employees, usually as the result of an IRS order, a court ruling or a settlement. Such reclassifications can result in significant liabilities. However, there are some options available to employers that can help limit these liabilities. See Reclassifying Independent Contractors as Employees.

State Requirements

The following states have additional requirements for this topic under applicable state law.