What is an Independent Contractor Test?

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  • Written By: N. Madison
  • Edited By: Jenn Walker
  • Last Modified Date: 22 November 2019
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An independent contractor test is used to determine whether or not a party qualifies as an independent contractor. This frequently comes up when businesses and the individuals they hire are dealing with taxing agencies. Tax agencies often provide an independent contractor test, which is basically a list of guidelines for determining whether an individual can truly be considered an independent contractor or should be listed as an employee instead. These guidelines may vary from jurisdiction to jurisdiction.

The factors considered by different jurisdictions to determine whether a person is an independent contractor or an employee may differ. In most places, however, one of the deciding factors is work hours. When a person is an employee, he is often required to work set hours or a minimum number of hours each day, week, or month. An independent contractor, however, can usually set his own hours. Instead of working set hours as stipulated by his client, his goal is usually to complete the work for which he has contracted by the deadline to which he has agreed.


Another factor in an independent contractor test is whether or not the party in question has a critical role in the company’s business operations. For example, if a person’s work is critical to the company's daily operations, he may be considered an employee. On the other hand, he may be considered an independent contractor if he is engaged in project work, his work with the company is temporary in nature, or his work and presence is not necessary for business as usual.

Often, the place in which a person works also plays a role in whether he is considered an independent contractor or an employee. Depending on the other details of his relationship with a company, a person may be considered an employee if he is required to work in a specific location, such as in one of the company’s office cubicles. If the party performs much or all of his work off the company’s premises and can choose where he wants to work, he may be considered an independent contractor. There are some exceptions to this, however. For example, a consultant may temporarily work on a project on his client’s premises without being considered an employee.

Payment is often part of the independent contractor test as well. When a person is an independent contractor, he is often paid upon the completion or submission of work projects. In many cases, he submits an invoice in order to request payment. An employee, on the other hand, is often paid on a weekly or biweekly basis. Sometimes, an employee may submit a time card to show how many hours he worked during the pay period.


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