The subject of who is an employee and who can be classified as an independent contractor is a hot topic right now. Both the IRS and the Department of Labor (DOL) are actively auditing employers to locate misclassified employees. But how do you know if you are doing it correctly, when you classify a worker as an independent contractor? The IRS has, of course, their 3 factor control tests that you can apply. They also have the Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. Employers can use this form to help themselves determine worker status or even submit it to the IRS and let them make the determination (not usually anyone’s first choice!). But what about the DOL and the FLSA? What do they offer to help determine a worker’s classification?
elaws is the main assistance program that helps employers navigate the complexities of the Fair Labor Standards Act requirements. These interactive web pages answer various questions on things such as calculating overtime and who should be exempt. Now the DOL has a elaws on Independent Contractors that give some simple but efficient information to help employers determine if the worker should be an employee or not. It explains the background of how the determinations are made as well as the six areas that are investigated to determine the worker’s status. Though a simple one-page elaws it does provide good information for employers.