Many employers are struggling with how to determine if an employee will be considered an independent contractor by the various state unemployment agencies. The ramifications of misclassification can be huge fines that impact the financial stability of an organization.  To protect your organization, please use one of the two most common methods of determining whether or not someone is an employee or not.

IC or EEOne test widely used is the United States Supreme Court’s 5 point test in determining whether someone is an employee or an independent contractor.

  1. The degree of control exercised by the alleged employer – the more control an employer has, the less likely it is that this person is an independent contractor.
  2. The extent of the relative investments of the [alleged] employee and employer – This includes education and training programs. The more the employer invests, the less likely this person is an independent contractor.
  3. The degree to which the “employee’s” opportunity for profit and loss is determined by the “employer” – this can include giving raises, bonus, etc.
  4. The skill and initiative required in performing the job
  5. The permanency of the relationship

Another test used to determine whether or not a person is an employee is the ABC test. Roughly 2/3 of state agencies use this method.  To be considered an independent contractor, a worker must meet three separate criteria (some states require only that two criteria be met):

If you have additional questions regarding independent contractor tests, please contact CCC at contact@corporatecostcontrol.com or (800) 207-6926

 


Contact CCC to see how we can save your organization time and money.
Contact our Sales Team
(800) 207-6926

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