Independent Contractor-Type of Relationship
Type of relationship refers to facts that show how the worker and
business perceive their relationship to each other.
The factors, for the type of relationship between two parties,
generally fall into the categories of:
1. Written contracts
2. Employee benefits
3. Permanency of the relationship
4. Services provided as key activity of the business
5. Written Contracts
Although a contract may state that the worker is an employee or an
independent contractor, this is not sufficient to determine the
worker’s status. The IRS is not required to follow a contract
stating that the worker is an independent contractor, responsible
for paying his or her own self employment tax. How the parties work
together determines whether the worker is an employee or an
independent contractor.
Employee Benefits
Employee benefits include things like insurance, pension plans, paid
vacation, sick days, and disability insurance. Businesses generally
do not grant these benefits to independent contractors. However, the
lack of these types of benefits does not necessarily mean the worker
is an independent contractor.
Permanency of the Relationship
If you hire a worker with the expectation that the relationship will
continue indefinitely, rather than for a specific project or period,
this is generally considered evidence that the intent was to create
an employer-employee relationship.
Services Provided as Key Activity of the Business
If a worker provides services that are a key aspect of the business,
it is more likely that the business will have the right to direct
and control his or her activities. For example, if a law firm hires
an attorney, it is likely that it will present the attorney’s work
as its own and would have the right to control or direct that work.
This would indicate an employer-employee relationship.
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Contractor Overview |
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Type of Relationship
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