The determination of whether a worker is an employee or a contractor is based on the degree of control the company has over the worker and the worker’s opportunity for profit or loss. The IRS uses a set of factors outlined in the Internal Revenue Code (IRC) Section 3121(d)(2) (https://www.law.cornell.edu/uscode/text/26/3121) to evaluate the worker’s status. These factors include the company’s control over the worker’s behavior, financial control, the type of relationship between the parties, and the worker’s opportunity for profit or loss. Companies should carefully evaluate each worker’s situation and maintain proper documentation to support their classification.
H