Whether a worker is an “employee” or an “independent contractor” is critical when it comes to such important issues as pension eligibility, workers' compensation coverage, wage and hour law, and many other matters. In some situations, federal law will govern, but the question is most often resolved by looking to state law, particularly in areas such as unemployment tax liability, workers' compensation, and state wage and hour requirements.
Iowa Workforce Development and the Iowa Department of Revenue have investigators and auditors who determine worker classification by employers. Each case is determined on the basis of its own facts, and several factors are considered. The right to control the work to be done and how it will be done, whether or not used, is an important factor in determining if an individual is an employee. The right to discharge a worker at will and without cause is strong evidence of the right of direction and control. Other factors include:
• How much does the employer actually control the way the services are performed?
• Does the person performing the services have a separate, established occupation or business?
• Is the work usually performed without supervision?
• What skill is needed to perform the services and accomplish the desired result?
• Who supplies the tools, equipment, and place of work for the person doing the work?
• Is performance of services an isolated or continuous event?
• How is the worker paid? Is it by time (hourly or weekly), a piece rate, or by the job?
• Is the work part of the regular business of the employer?
• Are the services performed for the employer as an individual or for the employer’s business?
• Can the worker make ...