| Employer or Independent Contractor?? |
A Quick Guide
|
| Employee |
Contractor |
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| 1. Instructions |
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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. |
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|
| 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. |
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|
| 3. Integration |
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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. |
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| 4. Services Rendered Personally |
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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. |
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|
| 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. |
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|
| 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. |
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| 7. Set Hours of Work |
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An employee’s hours and days are set by the
employer. |
Contractors are masters of their own
time. |
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|
| 8. Full Time Required |
|
An employee normally works full time for an
employer. |
Contractors are free to work when
and for whom they choose. |
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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. |
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| 10. Order of Sequence Set |
|
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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 contractors
own pace. Salespersons work their
own schedules and usually have their
own offices. |
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|
| 11. Oral or Written Reports |
|
Employees are required to submit regular
oral or written reports to the employer. |
Contractors submit no reports. |
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12. Payment by Hours, 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. |
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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. |
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|
| 14. Furnishing of Tools & Materials |
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| An employer furnishes tools, materials, etc. |
Contractors furnish their own tools, etc. |
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| 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. |
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| 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. |
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17. Working for More than One
Firm at at 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. |
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18. Making Services Available to
the General Public |
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An employee does not make services
available to the general public. |
Contractors have their own offices
and assistants. The hold business
licenses, are listed in business
directories, maintain business telephones,
and otherwise generally make their
services available to the public. |
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| 19. Right to Fire |
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An employee can be discharged at
any time. |
Contractors cannot be fired so long
as product results meet contract
specifications. |
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| 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. |
