Employment Status and Independent Contractors

A Note explaining the independent contractor classification, including the benefits of the classification and the penalties for misclassification. This note addresses federal law. For information on state law requirements, see the State Q&A Tools under Related Content to the right.

An independent contractor agreement between an independent contractor (a self-employed individual) and a client company for consulting or other services. This Standard Document is drafted in favor of the client company. This Standard Document has integrated notes with important explanations and drafting tips.

A Checklist of independent contractor classification considerations and practical steps a company can take to minimize the risk of misclassification of employees as independent contractors. This Checklist considers individual workers and using outside firms as independent contractors. It is jurisdiction-neutral.

This tool enables subscribers to search and compare PLC's Independent Contractors State Q&A resources. Questions and answers address state-specific definitions of independent contractor, benefits of using independent contractors, tests used to assess proper classification, administration/enforcement, penalties and more. Simply select the questions and the jurisdictions that you are interested in and click the "Submit" button. To see all of PLC's State Q&As on Independent Contractors, see State Q&A Guide to Independent Contractors. To see all of PLC's State Q&As, including relevant Legal Updates since the publication date (under Related Content), see individual Q&As on the Labor & Employment State Q&As landing page.

A Q&A guide to state law on independent contractor status for private employers in Alabama. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Arkansas. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Colorado. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Delaware. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Florida. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Idaho. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Indiana. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Kansas. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Louisiana. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Maryland. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Michigan.  This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Mississippi. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Nebraska. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool). 

A Q&A guide to state law on independent contractor status for private employers in New Hampshire. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool). 

A Q&A guide to state law on independent contractor status for private employers in New York.  This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Ohio. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Oregon. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in South Carolina. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool). 

A Q&A guide to state law on independent contractor status for private employers in Texas.  This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in Virginia. This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or muncipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

A Q&A guide to state law on independent contractor status for private employers in West Virginia.  This Q&A addresses how independent contractors are classified under state law, including the various tests to evaluate worker status, penalties for misclassification and practices to avoid misclassification. Federal, local or municipal law may impose additional or different requirements. Answers to questions can be compared across a number of jurisdictions (see Independent Contractors: State Q&A Tool).

This Article describes the new IRS employment tax audit project and suggests actions companies can take if they receive an audit notice.

The Internal Revenue Service (IRS) has announced that it has expanded its Voluntary Classification Settlement Program (VCSP), making it possible for many more interested employers to apply. To achieve this expansion, the IRS is modifying the eligibility requirements to allow employers under an IRS audit to qualify for the VCSP, to reduce the special six-year statute of limitations, and to temporarily waive the requirement that employers must have filed required Forms 1099 for workers they wish to reclassify.

This Law Firm Publication by Stoel Rives LLP discusses the Oregon Court of Appeals' recent decision in Compressed Pattern LLC v. Employment Department, clarifying the "maintain a separate business location" prong of the statutory test for independent contractor status applicable to Oregon's unemployment and workers' compensation laws. Under the test, an individual may be an independent contractor if he maintains a separate business location from the employer and otherwise satisfies the test. In Compressed Pattern, the court found an architect-intern who performed drafting work for a design company was the company's employee and not an independent contractor, in part because he performed the drafting work at the offices of an architectual firm that had laid him off, rather than using space he paid for himself.

This Law Firm Publication by Jackson Lewis LLP discusses California's Senate Bill 1038, which was recently signed by Governor Brown. Effective January 1, 2013, the new law will, among other things, eliminate the California Fair Employment and Housing Commission (FEHC). The FEHC's duties of rulemaking and administrative adjudication of discrimination claims will be mainly assumed by the Department of Fair Employment and Housing (DFEH), which will include a Fair Employment and Housing Council.

California became the 12th state to sign a memorandum of understanding with the Department of Labor's Wage and Hour Division to reduce the improper classification of employees as independent contractors.

The National Labor Relations Board (NLRB) held that musicians are employees rather than independent contractors of a symphony orchestra. In its December 27, 2011 decision in Lancaster Symphony Orchestra, the NLRB found the musicians to be employees using the common law agency test, because the employer controlled all manner of performance and scheduling after the musicians agreed to play. Member Hayes dissented.

The IRS updated its Frequently Asked Questions page on the Voluntary Classification Settlement Program (VCSP). The VCSP allows employers to voluntarily reclassify current non-employees as employees and is meant to increase tax compliance and improve certainty among employers, employees and the government.

New employment laws cover areas such as consumer credit reports, penalties for willful independent contractor misclassification, written commission agreements and pay information notices for newly hired employees, among other areas.

On September 21, 2011, the IRS announced that it has initiated the Voluntary Classification Settlement Program (VCSP). The VCSP will allow employers to voluntarily reclassify current nonemployees as employees. The Program is designed to increase tax compliance and improve certainty among employers, employees and the government.