Under the Common Law, workers are classified as either employees or independent contractors. The central focus of the Common Law is to determine who has the right to control the work that must be done (the results of the work) and how it must be done (the method by which the work or services are performed).
An employee is any individual who performs services subject to the will and control of an employer, both as to what is to be done and how it is to be done.
An independent contractor is any individual who renders services in the course of an independent occupation representing the will of his employer as to the result of his work and not as to the means by which it is accomplished. An independent contractor is not required to work unless he feels he has an opportunity to make a substantial profit. An independent contractor is generally self-employed.
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If an employee is also doing contract work, set up the employee as an independent contractor in addition to employee set up. Setting the individual up as an independent contractor will assign an independent contractor number. Be sure to pay the employee for the contract work under the independent contractor number. If you are still unsure about the proper determination of a worker's status, visit the Internal Revenue Service web site at www.irs.gov. |
