What Are The Deciding Factors For Worker Classification?
The IRS has recently revised its tests/factors which it applies in determining a worker’s status. These factors have changed many times over the years. As such, it is important for companies to retain the services of a firm that concentrates entirely in the field of tax law, and remains at the forefront of worker classification issues and other tax matters.
Worker Classification Factors — Employee Versus Independent Contractor
There is not a single deciding factor that is considered when determining whether a worker is an employee or an independent contractor. The totality of the circumstances must be examined, and each of these factors must be weighted and examined based on each individual’s situation. The three main areas that the IRS will examine in regard to worker classification are:
- Control: Does the employer have control (unilaterally) or the right to control the result of the work?
- Nature of the relationship: Is there a contract? Does the business provide the equipment or tools necessary to complete the work? Is the relationship between the worker and employer continuous?
- Finances: How is the worker paid (hourly, monthly, per project basis)? Does the business reimburse the worker for expenses?
At the Law Offices of Robert T. Leonard, we can help you assess these and all other relevant factors that impact worker classification. We will counsel you on the ways that you can protect your business’ interests against misclassification issues and other matters that are assessed as part of the IRS’s employment tax initiative. Our proactive strategies encompass a range of options, including utilizing the Classification Settlement Program (CSP) or obtaining safe-harbor relief.
We provide our clients with direct access to attorney and CPA Rob Leonard. The personal attention and custom-tailored representation of Mr. Leonard allows us to protect the interests and bottom lines of businesses in Woodland Hills, Los Angeles and the San Fernando Valley, as well as throughout California and other portions of the United States.