Arizona Independent Contractors laws & HR compliance analysis

Arizona Independent Contractors: What you need to know

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.
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Arizona follows the common-law test when evaluating whether an individual is an employee or an independent contractor. Arizona allows employers to request that individuals classified as independent contractors sign a Declaration of Independent Business Status (DIBS). The execution of a DIBS is not mandatory in order to establish the existence of an independent contractor relationship between a business and an independent contractor. The failure of a party to execute a DIBS does not create any presumptions and is not admissible to deny the existence of an independent contractor relationship. Any business contracting with an independent contractor may prove the existence of an independent contractor relationship by the independent contractor executing a DIBS and by the business acting in a manner substantially consistent with the DIBS. Compliance creates a rebuttable presumption of an independent contractor relationship between the independent contractor and the business with which the independent contractor contracts. A DIBS must be signed by the independent contractor, be dated, and substantially comply with the following sample form:
This DIBS is made by (contractor) in relation to services performed by the contractor ...

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