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Independent Contractor Classification: 20 Common Law Factors
- No instruction: Independent contractors are not required to follow or take any instructions on how to accomplish a job. Firms are only allowed to provide them with specifications of the job.
- No Training: Independent contractors do not usually receive training by the firm they were hired by. They usually use their own procedures to complete the work.
- Services don’t have to be finished personally: Independent contractors are hired to complete a job, but they have the right to hire others to do the actual work.
- Work is not essential to the hiring firm: A business’s success or continuation should not depend on the service of outside independent contractors. For example, a law firm which called it lawyers independent contractors.
- Set own work hours: Independent contractors set their own work hours.
- No continual relationship: Typically independent contractors do not continually work for the same firm. The relationship can be frequent but it must be at irregular intervals, on call, or whenever work is available. Heads up for those who might think part-time, seasonal or short relationships are part of independent contractor status. They are not.
- Control their own assistant (if needed): Independent contractors have the ability to hire their own assistants. An assistant shouldn’t be provided by the firm that hired that contractor.
- Time to pursue other work: Independent contractors should have time available to pursue other work.
- Job location: Independent contractors control where they work. If they work on the firms location, it’s not under direction or supervision.
- Order of work performed: Independent contractors decide the order and how they will perform their work
- No interim reports: Independent contractors are hired and paid based off their final result of the work. There shouldn’t be any progress or interim reports.
- Paid by Job: Independent contractors are usually paid by the job and not how many hours spent on the job. Payments can be made periodically based on the percentage of the job completed. It can also be based on the number of hours estimated by a fixed hourly rate, which should be determined before they start the job.
- Work for multiple firms: Much of time independent contractors do work for more than one firm at a time.
- Pay business expenses: Independent contractors are generally responsible for their incidental expenses.
- Own tools: Typically independent contractor have and use their own set of tools to accomplish the job.
- Significant investment in their own business: Independent contractors should be able to perform their services without any aid from the hiring firm. The contractor’s investment in his trade must be real, essential and adequate.
- Offer their service to general public: Independent contractors can make their services available to the public by on or more of the following; having an office and assistant, having a business sign, having a business license, listing their services in a business directory and advertising their services.
- Possibility of profit or loss: Independent contractors have the ability to make a profit or a loss. Employees can’t suffer any loss. Here are some circumstances that could show a profit or a loss; contractor hires, directs and pays assistant; contractor owns his own office, equipment or materials; contractor has continuing and reoccurring liabilities; contractor agreed to do a job for prices that were agreed in advance; contractor’s services affect his own business reputation.
- Can’t be fired at will: Independent contractors cannot be fired at will as long as the produce the final result that meets contract specifications.
- No compensation for non-completion: Independent contractors are accountable for the completion of a job or will be legally obligated to compensate the hiring firm for failure to complete
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