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*This section is provided as a quick reference tool only.
(see disclaimer at the bottom)

Tips for Determining Employee versus Contractor Status

It is always a difficult problem to determine who is an employee or contractor and preventing those hired as contractors from being employees, or vice versa. Some of the major factors to be considered are as follows:

1. The extent to which the worker has unreimbursed visit expenses. Independent contractors are more likely to have unreimbursed expenses than employees. Employers should not routinely approve reimbursement requests for business-related expenses, because this could be used as evidence of employee status.

2. The extent of the workers' investment. An independent contractor often has a significant investment in the facilities he or she uses in performing services for someone else. One of the most significant investments is office or work space. employers should not provide tools, equipment, or supplies to individuals who are hired as independent contractors.

3. The extent to which the worker makes services available to the relevant market. If the worker does the same work for other companies, it's a key indicator of independent contractor status.

4. An employee is generally paid by the hour, week, or month. Independent contractors are usually paid by the job.

5. An independent contractor usually makes a profit or loss on the job. Employees receive paychecks whether the company they work for makes money or not.

6. Does the employer provide employee-type benefits such as insurance, pension plans, vacations, or sick days? Independent contractors do not usually provide this type of benefit.

7. Workers who are hired on a permanent basis are usually considered employees. If a worker is hired with the expectation that the relationship will continue indefinitely, this shows generally an employer/employee relationship.

*This section is provided as a reference tool only. Benefit rates as well as State agency contacts, phone numbers and addresses may change periodically and are not guaranteed. Please send notification of any changes to