What factors should be taken into account when evaluating whether an individual is a contractor or employee?

Author: Beth P. Zoller, XpertHR Legal Editor

Determining whether an individual is an employee or independent contractor is highly fact specific, and depends on the unique circumstances of each case. Courts and enforcement agencies consider a wide variety of different factors, but some of which include:

  • The skill required and the specialization of the individual's work,
  • The source of the individual's equipment, materials and tools;
  • The location of the work;
  • The duration of the relationship between the parties;
  • Whether the hiring party is permitted to assign additional work to the individual;
  • The extent of the individual's discretion over when and how long to work and who sets the individual's hours;
  • The method of payment and whether the individual is paid directly along with who determines how much the individual is paid;
  • The individual's role in hiring and paying assistants;
  • Whether the work is part of the regular business of the hiring party;
  • Whether the hiring party is in business and has other clients or customers;
  • The provision of employee benefits such as health insurance; and
  • The tax treatment of the individual.

If the factors show that an individual has sufficient control over his or her duties and responsibilities, the individual may be deemed an independent contractor. If the factors show that the hiring party exercises significant control over the means and manner of the individual's work and/or that the hiring party supervises the individual's daily duties, hours and responsibilities, the individual may be an employee. In such a situation, the individual will then have all the rights and remedies available to employees under federal or state law.