Classifying a person as an employee rather than as an independent contractor has wide-ranging legal consequences. For example, an employer generally must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes, while hiring an independent contractor requires no such duties. Likewise, an employee might be entitled to benefits such as pensions, insurance, sick leave, and vacation pay while an independent contractor would have no such expectations. In answering this question, our courts focus on the relationship between the worker and the business, generally, and issues of control and independence, in particular. Even these issues get broken down into narrower inquiries relating to behavioral control, financial control, and the type of relationship the parties have.
Behavioral control refers to the when, where, and how of working.
Training a worker to perform services in a particular manner also indicates an employer-employee relationship. Financial control entails the right to make decisions on the business aspects of a job. Employees are more likely than independent contractors to have expenses reimbursed and are less likely to have a significant investment in facilities used in the work. Employees have less freedom to seek out personal business opportunities. Guaranteed payment of a regular wage for a specified time period is usually a sign of employee status, while only an independent contractor will be in the position to realize a profit or a loss.