Who Is an Employee?

The IRS is cracking down on businesses that it says wrongly classify employees as independent contractors. Here are some guidelines from the tax agency and private attorneys who advise companies on how to determine classifications.

An employee . . .

* Works primarily on the employer’s premises during normal business hours

* Works hours that are regulated by the employer

* Is trained by the employer

* Is provided with tools and materials by the employer

* Is reimbursed for expenses

* Has a continuing working relationship with one employer

An independent contractor . . .

* Has an independent business license.

* Represents himself or herself to the public as an independent contractor, perhaps by advertising his or her services in the Yellow Pages

* Books his or her own jobs

* Is free to work for whomever he or she wants

* Sets own hours and work schedule

* Provides own tools and materials for the job

* Has a financial investment in his or her business

* Must negotiate to terminate relationship with employer before the contract is completed