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20 factors used by the IRS to determine employee or independent contractor status

See also updated views on the 20 factors.

The importance of each factor varies depending on the occupation and facts (as stated each indicates employee unless indicated). See Rev. Rul. 87-41.

  1. Compliance with Instructions;
  2. Training (services to be performed in a particular method or manner);
  3. Integration of the worker's services into the business operations;
  4. Services Rendered Personally – interested in the methods used to accomplish the work as well as in the results;
  5. Hiring, Supervising, and Paying Assistants generally shows control over the workers on the job (cf. worker to provide materials and labor pursuant to contract where responsible only for the attainment of a result, indicating independent contractor);
  6. Continuing Relationship (including frequently recurring although irregular intervals);
  7. Set Hours of Work;
  8. Full Time Required (impliedly restricts the worker from doing other gainful work);
  9. Doing Work on Employer's Premises (suggests control, especially if the work could be done elsewhere);
  10. Order or Sequence Set;
  11. Oral or Written Reports;
  12. Payment by Hour, Week, Month. (payment by the job or on a straight commission indicates independent contractor);
  13. Payment of Business and/or Traveling Expenses;
  14. Furnishing of Tools and Materials;
  15. Significant Investment indicates independent contractor. Special scrutiny required for certain types of facilities, e.g., home offices;
  16. Realization of Profit or Loss. (due to risk from substantial investment or bona fide expenses, NOT just risk of not getting paid);
  17. Working for More than One Firm at a Time indicates independent contractor (but a person can be an employee of more than 1 persons, particularly where part of the same service arrangement);
  18. Making Services Available to General Public (on a regular and consistent basis) indicates independent contractor;
  19. Right to Discharge;
  20. Right to Terminate.