What test does the IRS use to determine whether workers are ICs or employees?
Under the IRS test, workers are employees if the people they work for have the right to direct and control the way they work — including the details of when, where and how they do their jobs. In contrast, ICs are not controlled by the companies that hire them. The hiring company’s control is limited to accepting or rejecting the final results an IC achieves. The IRS looks at a number of factors when determining whether a worker is an employee or an independent contractor. The agency is more likely to classify as an independent contractor a worker who: • can earn a profit or suffer a loss from the activity • furnishes the tools and materials needed to do the job • is paid by the job • works for more than one client company at a time • invests in equipment and facilities • pays his or her own business and traveling expenses • hires and pays assistants, and • sets his or her own working hours. On the other hand, the IRS is more likely to classify as an employee a worker who: • can be fir
