How do government agencies determine whether a worker is an employee or an independent contractor?
There is no single, clear-cut test for classifying workers as employees or independent contractors. Different legal tests for determining worker status are used by various government agencies, including: • the Internal Revenue Service • state unemployment compensation insurance agencies • state workers’ compensation insurance agencies • state tax departments • the United States Labor Department, and • the National Labor Relations Board. Each of these agencies is concerned with worker classification for different reasons, and has different biases and practices. Each agency normally makes classification decisions on its own and doesn’t have to consider what other agencies have done, which means that one agency might decide that you are an independent contractor while another classifies you as an employee. It’s also possible, though rare, for a worker to be deemed an independent contractor in one state and an employee in another.
