Padgett Business Services

P.O. Box 31867
Mesa, Az. 85275-1867
P. 480.668.1155
F. 480.668.1313

Padgett Business Services

Employment Status Classifications – 20 Common Law Factors

These factors were developed based on an examination of previous cases and rulings that specifically considered whether an individual was an employee or independent contractor. The degree of importance of each factor varies depending on the occupation and environment in which the services were performed. The 20 factors are:

1. Instructions. A worker who must comply with another’s instructions about when, where and how to work is ordinarily an employee.

2. Training. If the worker is required to receive training to learn how to do the work, an employment relationship is likely.

3. Integration. The more the worker is integrated into business operations, the more likely the worker is to be an employee.

4. Services rendered personally. If the business requires the worker to provide services personally, an employment relationship is suggested.

5. Hiring, supervising and paying assistants. If the worker is responsible for his or her assistants, this is indicative of independent contractor status.

6. Continuing relationship. A continuing or recurring nature of work suggests employment.

7. Set hours of work. If hours are established by the business, this tends to indicate employment.

8. Full-time required. An independent contractor has more freedom as to when and for whom he or she shall work.

9. Doing work on business premises. If the employer requires this, it suggests control by the employer.

10. Order or sequence set. The more this is controlled for, instead of by, the worker, the more employment is suggested.

11. Reporting. The more the worker must report, the greater the control of those supervising him or her, thus indicating employment.

12. Payment by time, not job. Independent contractors are more often paid by the job.

13. Payment of travel expenses. An employer generally retains the right to regulate the employee’s business activities.

14. Furnishing of tools. Independent contractors more often furnish their own tools and materials.

15. Investment. Independent contractors more often invest in facilities that are used in performing services.

16. Realization of profit or loss. A worker who can realize a profit or loss from his or her services is generally an independent contractor.

17. Working for more than one firm at a time. An independent contractor will often perform services for more than one business at a time.

18. Making services available to the public. This indicates the status of an independent contractor who will often perform services for more than one business at a time.

19. Right to discharge. An independent contractor cannot be fired as long as he or she produces a result that meets contract specifications.

20. Right to terminate. If the worker can terminate services without liability, this indicates an employment relationship.

To avoid future problems with the authorities, employers should periodically review the nature of their working relationship with all contractors. These 20 factors should be incorporated in this review in order to ensure that the proper employment status is determined.