There are three basic tests for determining a worker’s status as an employee or independent contractor—the IRS’ 20-factor common law test (taxes), the Department of Labor’s (DOL) six-factor economic realities test (minimum wages and overtime) or the three-factor ABC test (state unemployment insurance). Two significant worker status issues have recently arisen. The DOL issued an Administrative Interpretation Letter on the six-factor test. And a state Supreme Court ruling makes it easier to classify a worker as an employee for wage payment purposes.
The six-factor test. Until now, your control over workers has been the linchpin for employee status.
What’s new: The DOL is stressing workers’ economic dependence on an employer, rather than your control over them.
DOL: Most workers are employees. The six factors should be used as guides to answer the question of economic dependence. No single factor, including control, should be o...(register to read more)