Misclassification of employees as independent contracts can be a serious issue and end up costing your company money. Having a worker sign an agreement that states they are not an employee does not necessarily make it true. So then, what makes someone an independent contractor? Below are some guidelines from the Department of Labor that help determine if they are a employee or an independent contractor.
Relative Investments by the worker and employer. Consider not just one but the total of all investments by worker and employer. An employee is unlikely to have business expenses whereas an independent contractor will.
Nature and degree of employer’s control. Does the employer control what the worker does and how the worker does their job? If so, that worker is most likely an employee.
Type of Relationship. Does the worker receive employment benefits like vacation pay or a pension plan? If the worker is receiving employment benefits they are most likely an employee
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