A potential contractor might complete a proposal. After a person accepts the position, the employer must ask for additional information about the employee such as date of birth, marital status, and citizenship status.Ī potential contractor normally interacts with the person or department that wants a certain service or task completed. The approved applicant receives a job offer. DescriptionĬovered by a number of federal and state employment and labor lawsĪ potential employee completes an application that is handled by Human Resources. The table highlights some differences in the business relationship with employees and independent contractors. The economic realities test used in most states makes it harder to classify a worker as an independent contractor because, in addition to the degree of control test, it considers the degree the worker is economically dependent upon the business. State-specific information is available from state workforce agencies Visit disclaimer page. Visit the IRS website Visit disclaimer page for more information.Įach state also has tests to determine a person’s status under workers’ compensation and unemployment insurance laws. The Internal Revenue Service uses a right-to-control test to assess a business' tax liability. Will the relationship continue and is the work a key aspect of the business?.Is there a written contract or employee benefits such as a pension plan, insurance, or vacation pay?.Does the company control the business aspects of the worker’s job? These include arrangements like how the worker is paid, whether expenses are reimbursed, and who provides tools and supplies.
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