To determine if you are legally an employee or an independent contractor largely depends on "the extent to which the employer controls the daily work of the employee," says Janice Goodman, a New York employment lawyer.
Government agencies and courts consider whether the business 1.) has the right to direct and control how, where and when you do your work;
2.) provides the necessary tools and equipment; 3.) decides whether and whom to hire to assist with the work; 4.) decides where to purchase supplies and services; 5.) determines if the work must be performed by you personally; and 6.) pays you a fixed amount regularly, either on salary or by the hour.
If most of these apply, and if you provide services that are a key aspect of the company's regular business, you are likely an employee.
Independent contractors, on the other hand, usually provide services that are not an integral part of the company's business, are paid by the project, have a temporary arrangement with the company, and decide their own conditions and manner of work. Independent contractors usually have unreimbursed business expenses, a significant investment in tools or equipment used to perform services, freedom to work for others, and the ability to realize a profit or loss on their work.
Keep in mind that you may fit the definition of an employee under some laws and not others. Laws concerning work hours and wages have a broader definition of employee than laws governing taxes and employee benefits, for example. Factors like where workers perform their work are irrelevant to the wage and hour laws, but are considered (though not determinative) for other purposes.
Finally, just because you sign an agreement that states you are an independent contractor does not make it true.
In the Microsoft case, for example, workers had agreed to be independent contractors, but the court decided they were employees. If the working conditions are like those of an employee, then an agreement stating you are an independent contractor may be unenforceable.
For a detailed explanation and examples of independent contractors and employees, see IRS Publication 15a, available at www.irs.gov.
For questions about entitlement to employee wages and benefits, contact your regional office of the US Department of Labor, Wage and Hour Division, or Pension and Welfare Benefits Administration.
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