Employee or contractor? It's not always easy to tell

It’s not always easy to clearly classify someone as either an employee or an independent contractor. Why does it matter? Either classification comes with its own reporting requirements.  Relevant taxes must be paid.  Classification can also impact workers' compensation insurance.  Those are just a few of the issues. California has a worksheet with 13 questions to help you make the correct classification. Just three of the issues to consider are below:

Does the person need instruction or supervision? Independent contractors are free to do jobs in their own way, you engage an independent contractor for the end result.  When a worker is required to follow company procedures they are normally an employee.

Can the worker quit or be fired at any time? Independent contractors are engaged to do specific jobs and cannot be fired before the job is complete unless they violate the terms of the contract. They are not free to quit and walk away until the job is complete.

Do you have employees who do the same type of work? If you do that indicates that the worker is an employee. When replacing an employee who is on vacation you have a temporary employee, not an independent contractor.

Referential has always been very careful about this, we get the classification right!