Is the work an integral part of the employer's business? The DOL says, for example, that a carpenter is integral to the employer's business, while a software developer who creates programs that assist the company in things like tracking bids, scheduling projects and crews, and tracking material orders is not.
Does the worker's managerial skill affect the worker's opportunity for profit or loss? The DOL asks us to consider a worker who provides cleaning services for corporate clients. If the worker performs assignments only as determined by the cleaning company and does not independently schedule assignments, solicit additional work from other clients, advertise services or endeavor to reduce costs, he or she does not exercise managerial skills that affect profit or loss and is, therefore, an employee. By contrast, a worker who produces ads, hires helpers to assist, recruits new clients, negotiates contracts and decides which jobs to perform and when is an independent contractor.
How does the worker's relative investment compare with the employer's investment? If the same cleaning worker in the above example is provided a vehicle, insurance and all equipment and supplies by the company, and if that company invests in advertising and finding clients by itself, even if the worker occasionally brings his or her own cleaning supplies, he or she is an employee. By contrast, if that worker receives referrals and invests in a vehicle not suitable for personal use and uses it to travel to various worksites, rents his or her own space to store the vehicle and material, does marketing and advertising, hires helpers for larger jobs, and purchases his or her own materials and equipment, the investment is similar to that of the above mentioned company, and the worker is an independent contractor.
Does the work performed require special skill and initiative?A carpenter who does not make any independent judgments at the job site, does not determine the sequence of work, order additional materials or think about bidding the next job, but is rather told what work to perform where, is an employee. If, on the other hand, that carpenter provides a specialized service for a variety of companies, markets his services, determines when to order materials and how much, and determines which orders to fill, then he is likely an independent contractor.
Is the relationship between the worker and employer permanent or indefinite?For example, an editor who has worked with a publishing house for years and does edits in accordance with its specifications on its software, and only edits books by that publishing house, is an employee; another editor who works intermittently with 15 different publishing houses and markets her services, negotiates rates for each editing job and turns down work for any reason would probably be an independent contractor.
What is the nature and degree of the employer's control?The example here is an RN who is listed with Beta Nurse Registry, which matches her with clients. The registry interviewed her before joining, required her to undergo a multi-day training presented by that registry, receives a listing each week with potential clients and requires the nurse to fill out a form with the registry before contacting clients. It also requires that the nurse adhere to a certain wage range and stipulates that she cannot provide care during any weekend hours, and must inform the registry if she is hired by a client or will miss scheduled work with a client. In this case, the nurse is an employee. However, if the nurse, listed with the Jones registry, is free to call as many or as few potential clients as desired, and negotiates wages and schedules with them, that nurse is probably an independent contractor.
