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The Twenty Factors of the"Common Law Test"
All of the following factors must be considered in determining whether an employment relationship exists:
Twenty Questions | Explanation |
---|---|
1. Compliance with instructions | Employees must comply with another person's instructions on when, where, and how the work is performed. In a true independent contractor relationship, the only control to which the contractor is subject is the result. |
2. Training required | Independent contractors are not normally trained but rather are hired for their expertise in a field. |
3. Integration of services into business operations | Integration of services into business operations |
4. Services rendered personally | Employees personally render the services, while contractors may delegate such work to others |
5. Hiring, supervising and paying assistants | Usually individuals who perform all these functions are treated as independent contractors. |
6. Continuing relationship | Employees are usually hired for an ongoing period, while a contractor's work ends when the job ends. |
7. Set hours of work | Employees usually must adhere to a work schedule established by the employer |
8. Full-time required | Generally, employees work full-time for an employer, while independent contractors work when and for whom they choose. |
9. Performing work on the employer's premise | Those working at the employer's site may be viewed as employees. |
10. Services performed in order or sequence set | Persons told to perform work in a certain sequence generally are considered employees. |
11. Oral or written reports | Employees are more likely to be required to submit regular reports to the employer. |
12. Payment by hour, week, month | Typically, employees are paid on a regular basis, while independent contractors are compensated by the job or on a lump-sum or straight commission basis. |
13. Payment of business and/or travel expenses | Employer payments of a person's work-related travel expenses generally indicates employee status. |
14. Furnishing of tools and materials | Employees, not individual contractors, are generally provided with supplies. |
15. Significant investment | Individuals who have a significant personal investment in the facilities they use for work are normally independent contractors. |
16. Realization of profit or loss | Unlike employees, independent contractors realize a profit or loss based on their success in performing a service. |
17. Working for more than one firm at a time | Individuals who perform services for a number of employers are usually independent contractors. |
18. Making services available to the general public | Individuals who regularly make their services available to the general public are usually treated as independent contractors. |
19. Right to discharge | Employees can be fired, while independent contractors cannot be discharged if they fulfill contract specifications. |
20. Right to terminate relationship without incurring liability | An employee can terminate his employment relationship with his employer at any time, whereas an independent contractor may be liable for breach of contract for leaving work unfinished. |