Employee vs. Independent Contractor Test

The Employee vs. Independent Contractor Test determines whether a worker is classified as an employee or an independent contractor. This classification affects tax liabilities, benefits, and legal rights. Typically, employees have more supervision, receive regular paychecks, and are entitled to benefits, while independent contractors have more control over how they work, set their rates, and are responsible for their own taxes. Factors such as the degree of control, financial arrangement, and the nature of the relationship help clarify the distinction. Proper classification is crucial for compliance with labor laws and tax regulations.