Factors Establishing Independent Contractor Versus Employee Status

It is the opinion of GO1099, LLC, backed by many years of business experience and our legal partners that any Professional backed by some years of experience has the right to be an independent contractor or consultant. It is our further opinion that becoming a member of GO1099.com and its affiliates additionally establishes a Professional as an independent contractor that only the Professional can change by opting to become a full-time employee for a company.

Additionally, our member Businesses have agreed to provide assignments and projects that can be performed according to the Professionals’ schedule at a fixed price, the only requirement being that the mutually agreed contract will meet the overall schedule of the company. This is no different than any other contract that companies enter for required performance.

The following are IRS rules concerning this whole issue.

In Revenue Ruling 87-41, 1987-1 CB 229, the IRS lists 20 factors that indicate employee status.  No single factor or group of factors is controlling.  A worker is an employee if he or she passes more than half of the following tests.

INSTRUCTIONS  Employees are required to follow someone else\'s instructions about when, how, and where to work, but independent contractors aren\'t required to do so.

TRAINING       Employees are usually trained by employers; independent contractors aren\'t.

INTEGRATION   When a worker is an integral part of a business, and the business depends on how well the job is performed, the worker is an employee.

SERVICES MUST BE RENDERED PERSONALLY An employee is hired to perform a job personally.  An independent contractor is free to subcontract the work to someone else.

HIRING, SUPERVISING, & PAYING ASSISTANTS  If the payer is responsible for these duties, it shows the payer controls the worker; therefore, the worker is an employee.  If the worker has these rights, and he or she provides materials and is paid by the piece, that person is usually an independent contractor.

CONTINUING RELATIONSHIP  Occasional jobs = independent contractor status.

SET HOURS TO WORK  An employee is required to work a specific number of hours while the independent contractor is not.

FULL TIME WORK      If someone has to work fulltime, this implies the payer controls the worker.  Thus, the worker is an employee.

DOING WORK ON AN EMPLOYER\'S PREMISES   Implies employee status.

ORDER OR SEQUENCE SET  In an employer-employee relationship, the employer controls, or has the right to control, the order or sequence of the work.

ORAL OR WRITTEN REPORTS      The requirement that a worker produce such reports implies that he or she is an employee.

PAYMENT BY HOUR, WEEK, OR MONTH   Such regular payments indicate employee status, but payments by piece or commission indicate independent contractor status.

PAYMENT OF BUSINESS & TRAVEL EXPENSES  Employees are usually reimbursed for such expenses; independent contractors usually pay their own way.

FURNISHING OF TOOLS OR MATERIALS   Employees are usually given tools they need for a job; independent contractors usually provide their own.

SIGNIFICANT INVESTMENT   An employee doesn\'t normally have a significant investment at stake.  Independent contractors may invest in facilities and equipment to perform a job.

REALIZATION OF PROFIT OR LOSS       Usually, an employee cannot realize a profit or loss from her job.  An independent contractor can make or lose money on a job.

WORKING FOR MORE THAN ONE FIRM AT A TIME     Employees are not free to work for other businesses, but independent contractors are.

MAKING SERVICE AVAILABLE TO THE GENERAL PUBLIC    Independent contractors make their services available to the public on a regular basis.  An employee can\'t.

RIGHT TO FIRE        Where this right exists, the payer exercises a great deal of control so that an employer-employee relationship exists.

RIGHT TO TERMINATE  If a worker has the right to walk away at any time without incurring a liability, this indicates employee status.

As a general rule, if an employer controls the end result and the means of accomplishing that end result, you have an employer-employee relationship.  If you do not have control over how a worker performs a job, you do not have an employer-employee relationship.

Compliments of:    Richard Yee
                   dba CENTURY SMALL BUSINESS SOLUTIONS
                   P.O. BOX 5109
                   Mesa, AZ  85211-5109
                   (480)467-3876