IRS DEFINITION ON AN "EMPLOYEE"

IRS Factors Which Determine That A Person Is An "Employee"

Instructions
An employee is required to comply with instructions about when, where, and how to work. Even if no instructions are given, the control factor is present if the employer has the right to give instructions.

Training
An employee is trained to perform services in a particular manner. Independent contractors ordinarily use their own methods and receive no training from the purchasers of their services.

Integration
An employee's services are integrated into the business operations because the services are important to the success or continuation of the business. This shows that the employee is subject to direction and control.

Services Rendered Personally
An employee renders services personally. This shows that the employer is interested in the methods as well as the results.

Hiring assistants
An employee works for an employer that hires, supervises, and pays assistants. An independent contractor hires, supervises, and pays assistants under a contract that requires him or her to provide materials and labor and to be responsible only for the result.

Continuing Relationship
An employee has a continuing relationship with an employer. This indicates that an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring although irregular intervals.

Set Hours of Work
An employee has set hours of work established by an employer. An independent contractor is the master of his or her own time.

Full-Time Work
An employee normally works full-time for employer. An independent contractor can work when and for whom he or she chooses.

Work Done on Premises
An employee works on the premises of an employer, or works on a route or at a location designated by an employer.

Order or Sequence Set
An employee must perform services in the order or sequence set by an employer. This shows that the employee is subject to direction and control.

Reports
An employee submits reports to an employer. This shows that the employee must account to the employer for his or her actions.

Payments
An employee is paid by the hour, week, or month. An independent contractor is paid by the job or on a straight commission.

Expenses
An employee's business and travel expenses are paid by an employer. This shows that the employee is subject to regulation and control.

Tools and Materials
An employee is furnished significant tools, materials, and other equipment by an employer.

Investment
An independent contractor has a significant investment in the facilities he or she uses in performing services for someone else.

Profit or Loss
An independent contractor can make a profit or suffer a loss.

Works for More Than One Person or Firm
An independent contractor gives his or her services to a multiple of unrelated persons or firms at the same time.

Offers Services to General Public
An independent contractor makes his or her services available to the general public.

Right to Fire
An employee can be fired by an employer. An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of their contract.

Right to Quit
An employee can quit his or her job at any time without incurring liability. An independent contractor usually agrees to complete a specific job and is responsible for its satisfactory completion, or is legally obligated to make good for failure to complete the job.