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When is an Employee an Independent Contractor?

Some employees may think that as long as both parties agree, the worker's status can be categorized as an independent contractor. However, that is not enough to establish their relationship under federal and state laws as an independent contractor. This is an incorrect assumption that is made fairly regularly. The IRS and the United States Department of Labor have certain criteria that they look at when determining whether someone is an independent contractor.

For the IRS, workers are considered independent contractors if the company does not manage how the worker works with the exception of accepting or rejecting their work. The IRS is more likely to classify someone as an independent contractor if the worker can earn a profit or suffer a loss from performing the work. It also looks at whether the worker is paid by the job instead of by the hour. The IRS looks at whether the worker works for more than one company at a time. There are several other factors that the IRS may consider when determining whether a worker is an independent contractor.


The United States Department of Labor is also interested in whether a worker is an independent contractor. Independent contractors are not covered under the Fair Labor Standards Act. Because of this, an independent contractor is not entitled to minimum wage or overtime.

The United States Department of Labor looks at several things when determining whether a worker is an independent contractor. It may look at whether the worker's work is an integral part of the employer's business. It may also look at the length of the relationship between the company and the worker. If it is a temporary relationship, the United States Department of Labor may consider the worker to be an independent contractor. It may also look at whether the employer controls the worker and whether the worker can make a profit or a loss. Like the IRS, the United States Department of Labor can consider other factors when making a determination about whether a worker is an independent contractor.

If you or someone you know is interested in more information, please contact Ms. Crossan at Bouchillon, Crossan & Colburn - bcc-wv.com. Ms. Crossan represents employees in West Virginia. Her office is located in Huntington, West Virginia.

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