AG 2008 01 22 - Laserfiche WebLink

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Memorandum #1079 May 21, 2007 Page 3 11) Whether a worker must submit reports, 12) Whether the worker is paid by the hour, week or month; 13) Whether the worker's business or traveling expenses are paid by the hiring organization; 14) Whether the worker furnished the tools, material and equipment needed to perform the work; 15) Whether the worker has a significant investment in facilities needed to do the work; 16) Whether the worker can make a profit or suffer a loss as a result of performing the services for the hiring organization; 17) Whether the worker can work for more than one firm at a time; 18) Whether the worker makes his or her services available to the general public; 19) Whether the hiring organization can discharge the worker; 20) Whether the worker- has the right to terminate the relationship with the hiring organization. Recent IRS publications refer more to the previously mentioned three categories -behavioral, financial, and relationship factors instead of the 20 factors of Revenue Ruling 87-41. Yet, the 20 factors can be helpful to a local government in making a status determination. The behavioral control factors refer to facts that indicate if the local government has the right to direct and control how a worker performs the specific job. Does the local government have the right to dictate the manner and means for completing a job? Facts that indicate the right to control are the- employer sets rules for employee conduct, sets the time to begin and end work, provides training or instructions on how to perform a job and monitors the progress towards the completion ofthejob. The financial control factors refer to facts that indicate if the local government controls the business and financial aspects of the workers' activities. Employees generally have no capital investment in providing the services, have no opportunity for profit or risk of loss in providing the services, do not advertise their services to the general public, do not provide the same services to other entities at the same time and do not incur unreimbursed expenses in providing the services. The relationship factors refer to facts that evidence the relationship of the worker to the local government. The relationship is generally evidenced by examining how the parties perceive their relationship and how that relationship is represented to others. Is there evidence of permanency in the relationship? Are the services provided by the worker integral to the local government's operations? Can the worker quit or be terminated without warning and without liability except for unpaid wages? There may be a written agreement between the worker and the local government that describes the worker as an independent contractor and provides evidence of an independent contractor relationship. However, a contractual designation will not,' in and of itself, provide sufficient evidence. for determining worker status. The substance of the relationship, not the label, is determining.