IRS Sub-Contractor Test

SEC 3003 - IRS’s 20 FACTOR TEST

IRS has developed a 20 factor test to use as a guide in determining whether a worker is an employee or an independent contractor.  These factors help ascertain whether sufficient control is present to establish an employer-employee relationship.  The 20 factors are:

1.  A worker required to comply with others instructions of when, where and how to work is usually an employee.

2.  Training a worker indicates that services are to be performed in a particular method.

3.  Integration of a worker’s services into the business indicates control.

4.  Services to be rendered personally indicate control.

5.  The right to hire, supervise and pay assistants shows control.

6.  A continuing relationship indicates an employment relationship.

7.  Set hours for the worker indicate control.

8.  Full time work indicates control. An independent contractor is free to work when and for whom he/she chooses.

9.  Work performed on a business’s premises suggests control.

10. Requiring work to be performed in a set manner suggests control.

11. A requirement that the worker submit regular or written reports indicates control.

12. Payment by the hour, week, or month indicates an employment relationship.

13. Payment of business expenses indicates an employment relationship.

14. Furnishing of tools and equipment indicates an Employment relationship.

15. Investment by the worker in facilities indicates an independent contractor.

16. The ability to realize a profit or loss from services indicates an independent contractor.

17. Working for more than one firm at a time indicates an independent contractor.

18. Services available to the general public on a regular and consistent basis indicate an independent contractor.

19. The right to discharge a worker indicates an employment relationship.

20. The workers right to terminate his relationship without liability indicates an employment relationship.