The Common Law Test to determine whether a worker is an employee

The table below from the American Payroll Association’s Fundamentals of Payroll classifies employees versus independent contractors under the Common Law Test.

Employee	Independent Contractor
Required to comply with employer’s instructions about when, where, and how to work	Sets own hours; determines own sequence of work
Works exclusively for the employer	Can work for multiple employers; services available to the public
Hired by the employer	Is self-employed
Subject to dismissal; can quit without liability	A contract governs how the relationship can be severed
Has a continuing relationship with the employer	Works by the job
Work done personally	Permitted to employ assistants
Performs services under the company’s name	Performs services under the worker’s business name
Paid a salary; reimbursed for expenses; participates in company’s fringe benefits programs	Payment by the job; opportunity for profit and loss
Furnished tools, equipment, materials, and training	Furnishes own tools, equipment, and training; substantial investment by worker
If an outside salesperson: company provides leads, sets terms and conditions of the sale, assigns a territory, and controls the sales process	Controls the sales process and terms

Nonemployees use Form W-9 to provide a taxpayer identification number (social security number or employer identification number) to the company that the nonemployee has received a reportable payment.

Source: American Payroll Association

Disclaimer: This information is not intended to provide a definitive answer. Always seek guidance from your attorney or accountant when classifying employees. Employers or independent contractors can get a definitive IRS ruling on their worker’s status by completing Form SS-8.