| Employee or Independent Contractor |
| a quick guide
|
Employee |
Independent Contractor |
| |
|
| 1. Instructions |
|
| Employees comply with
instructions about when, where, and how work is to be performed. |
Contractors set their own hours
and do the job in their own way. |
| 2. Training |
|
| Employees are trained to perform
services in a particular way. They are required to take correspondence courses and attend
meetings. Other methods also indicate that the employer wants the services performed in a
particular way. |
Contractors use their own methods
and receive no training from the purchaser of their services. |
| 3. Integration |
|
| Services of an employee are
merged into the business. Success and continuation of the business depends upon these
services. The employer coordinates work with that of others. |
The success and continuation of
the business aren’t dependent on services provided by a contractor. |
| 4. Services Rendered
Personally |
|
| Services must be rendered
personally. An employee does not engage other people to do the work. |
Contractors are able to assign
their own workers to do the job. |
| 5. Hiring, Supervising, Paying |
|
| An employee hires, supervises and
pays workers at the direction of the employer (i.e.: acts as foreman or representative of
the employer). |
Contractors hire, supervise and
pay the other workers as the result of a contract. A contractor agrees to provide
materials and labor and is responsible for the results. |
| 6. Continuing Relationship |
|
| An employee continues to work for
the same person year after year. |
Contractors are hired to do one
job. There is no continuous relationship. |
| 7. Set Hours of Work |
|
| An employee’s hours and days
are set by the employer. |
Contractors are masters of their
own time. |
| 8. Full Time Required |
|
| An employee normally works full
time for an employer. |
Contractors are free to work when
and for whom they choose. |
| 9. Doing Work on
Employer’s Premises |
|
| Employees work on the premises of
an employer; or on a route, or at a site, designated by the employer. |
Contractors work off an
employer’s premises and use their own offices, desks, and telephones. |
| 10. Order or Sequence Set |
|
| An employee performs services in
the order or sequence set by the employer. Salespersons report to the office at specified
times, follow-up on leads, and perform certain tasks at certain times. |
Services are performed at a
contractor's own pace. Salespersons work their own schedules and usually have their own
offices. |
| 11. Oral or Written Reports |
|
| Employees are required to submit
regular oral or written reports to the employer. |
Contractors submit no reports. |
| 12. Payment by Hour, Week,
Month |
|
| Employees are paid by the
employer in regular amounts at stated intervals. |
A contractor is paid by the job
on a straight commission. |
| 13. Payment of Business and/or
Travel Expenses |
|
| The employer pays employees’
business and/or travel expenses. |
Contractors take care of their
own expenses and are accountable only to themselves for expenses. |
| 14. Furnishing of Tools,
Materials |
|
| An employer furnishes tools,
materials, etc. |
Contractors furnish their own
tools, etc. |
| 15. Significant Investment |
|
| An employee has no significant
investment in the facilities used to perform services. |
A contractor has a real,
essential and significant investment. |
| 16. Realization of Profit or
Loss |
|
| An employee cannot realize a
profit or loss by making good or bad decisions. |
Contractors can realize a profit
or suffer a loss as a result of their services or decisions. |
| 17. Working for More than One
Firm at a Time |
|
| An employee usually works for one
employer at a time. |
An independent contractor works
for a number of persons or firms at the same time. |
| 18. Making Services Available
to the General Public |
|
| An employee does not make
services available to the general public. |
Contractors have their own
offices and assistants. They hold business licenses, are listed in business directories,
maintain business telephones, and otherwise generally make their services available to the
public. |
| 19. Right to Fire |
|
| An employee can be discharged at
any time. |
Contractors cannot be fired so
long as product results meet contract specifications. |
| 20. Right to Quit |
|
| Employees can quit their jobs at
any time without incurring liability. |
Contractors agree to complete a
specific job and are responsible for satisfactory completion; or they are legally
obligated to make good for any failure. |
