Employee or contractor case law

How to determine if a person is an employee or an independent contractor. There are no rules as to the weighting given to the indicia in the decision making process. Classifying a worker as an employee or an independent contractor has a significant effect on the cost of employing that individual. For this reason, the IRS and Department of Labor pay close attention to worker classification issues to ensure that employers are making the right determinations. To determine whether Ms Bailey was an employee or an independent contractor the Commission applies well-established common law principles.

There is, however, an appreciable difficulty in attempting to categorise a relationship as one of employee or independent contractor.

A recent decision Federal Court decision is an important one for employers looking for case law around the murky world of law concerning whether an individual is an employee or a contractor. Are You an employee or contractor? Can I classify a worker as an independent contractor? What factors determine whether a worker is an employee or an independent contractor? What is the difference between an employee and a contractor?

The law is pretty clear about the rules and perks of being an employee vs. If you have additional questions about the law in your area, speak with an employment attorney today. Therefore, Courts look at previous cases to work out whether you are a contractor or an employee.

Traditionally, the High Court used the “control test.

Greater control by the boss implies an employee relationship. See full list on irs. Facts that provide evidence of the degree of control and independence fall into three categories: 1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent cont.

The form may be filed by either the business or the worker. The IRS will review the facts and circumstances and officially determine the worker’s status. Be aware that it can take at least six months to get a determination, but a business that continually hires the same types of workers to perform particular services may want to consider filing the Form SS-8(PDF).

Once a determination is made (whether by the business or by the IRS), the next step is filing the appropriate forms and paying the associated taxes. Forms and associated taxes for independent contractors 2. There are specific employment tax guidelines that must be followed for certain industries. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply). Employment Tax Guidelines: Classifying Certain Van Operators in the Moving Industry(PDF) 2.

If you have a reasonable basis for not treating a worker as an employee , you may be relieved from having to pay employment taxes for that worker. To get this relief, you must file all required federal information returns on a basis consistent with your treatment of the worker. Contractor or Employee Who am I? Most workers in New Zealand are employees and not contractors. However, this is not always the case. This page is about the classification of workers.

If you are looking for information on home improvement contractors , see Law about home improvement. Evaluation systems measuring just the end result point to either an independent contractor or an employee. Independent contractors ordinarily use their own methods.

The difference between a contractor and an employee is not always clear cut. Under Australian employment law , the relationship between you and your employee is a contract of service, but the relationship between you and an independent contractor is a contract for service. There’s nothing temporary about it: contract work is on the rise. A common issue raised in many labour disputes is whether a person is an employee or an independent contractor.

The nature and consequences of either are fundamental. Applying the tests Determining if an individual is an employee or contractor at law , first requires the application of the common law test.