Remote Independent Contractors Test Same as Jobsite
How does an employer know if their remote independent contractors are not considered employees?
One of the most popular questions we receive, besides the taxability of benefits, comes from the employee vs. independent contractor question. The IRS webpage that I have recommended for years when making the independent contractor determination can be found at this link.
Each state has its own set of independent contractor determination rules. Please take this advice as a suggested source for general rules.
One updated area that I noticed on the webpage is included below. The test for remote independent contractors shares the same test for anyone in an office or at a jobsite.
From the IRS website –
Remote workers
An individual working remotely, for example, performing services for you from a location other than an office operated by you, is your employee under the common-law rules if you can control what will be done and how it will be done. This is so even if the worker can choose to work remotely. What matters is that you have the right to control the details of how the services are performed.
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The test for remote independent contractors remains the same as 10 -15 years ago. A remote worker may look independent as they are location independent.
The updated three tests for the level of independence center on control by the employer – behavioral, financial, and the type of relationship.
- Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work.
- Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job.
- Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.
There is no “magic” or set number of factors that “make” the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors that are relevant in one situation may not be relevant in another.
Bottom Line on Remote Independent Contractors
A remote independent contractor determination is the same test as with other employees or contractors. As a layover from the pandemic, being physically remote does not make one an independent contractor.
