Answer seven questions about how you work with someone to see whether they lean toward employee or independent contractor — and how much misclassification risk you may be carrying.
Think about one specific worker as you answer. Nothing is stored.
Whether a worker is an employee or an independent contractor isn't your choice to make by label alone — it's determined by the facts of the relationship. The central question across most tests is control: the more you direct how, when, and where someone works, the more they look like an employee. The more independence they have to run their own business and serve other clients, the more they look like a contractor.
Setting hours, supplying tools, requiring the person to work only for you, an open-ended ongoing relationship, dictating the method (not just the result), making the work central to your business, and providing training all point toward employee status. Each "yes" above reflects one of these control factors.
Employees come with payroll taxes, withholding, minimum-wage and overtime rules, and often benefits. Contractors don't. Because the stakes are real, regulators scrutinize classification closely — and getting it wrong can trigger back taxes, penalties, interest, and wage claims, sometimes going back years.
A written agreement helps document intent, but it doesn't control the outcome. Agencies and courts look at how the relationship actually works in practice. If the day-to-day facts look like employment, a "contractor" label won't protect you.
It's a stricter standard used in some states and contexts. It generally presumes a worker is an employee unless the business can show all three: the worker is free from control, performs work outside the company's usual business, and is engaged in an independently established trade. It's harder to meet than the older common-law factors.
You could owe back payroll taxes, unpaid overtime and minimum wage, penalties, and interest, and face claims for benefits the worker should have received. Different agencies can pursue their own claims, so the exposure can stack up.
Not necessarily. The IRS, the U.S. Department of Labor, your state tax agency, and state labor law may each apply different tests, so a worker could be treated as a contractor under one and an employee under another. That's why a professional review matters.
This classifier provides a general, simplified assessment for educational purposes only. It is not legal or tax advice and does not reflect any specific agency's or state's test. No attorney-client relationship is formed by using this tool.
FirmLift Interactive Tool · Demonstration