Kaustuv
(Practicing CA)
(1773 Points)
Replied 06 February 2008
Please see the views of tax authority in US on the above matter.. these factors are used as an aid in determining whether an individual is an employee under the common law rules....
1. Instructions. An individual who must comply with instructions is usually considered an employee.
2. Training. If the worker needs training in order to do the work for which he was hired, it usually indicates that he is an employee.
3. Integration. If the worker’s services are an integral part of the operation of the organization this generally shows that the individual is an employee.
4. Services rendered personally. If the services must be done personally by the individual, this suggests she is an employee. A self-employed individual generally has the right to hire a substitute.
5. Hiring, supervising, and paying assistants. Hiring, supervising and payment of assistants by the employer normally means that all of the workers are employees. A self-employed individual would hire, supervise and pay their own assistants.
6. Continuing relationship. The existence of a continuing relationship between an individual and the organization for whom the individual performs services is a factor tending to indicate the existence of an employer-employee relationship.
7. Set hours of work. If the worker has set hours, this generally means he is an employee. A self-employed individual sets his own hours.
8. Full-time required. If Full-time work is required, the worker is generally an employee. Self-employed persons can choose when and for whom to work.
9. Doing work on employer’s premises. Doing the work on the employer’s premises can indicate that the worker is an employee.
10. Order or sequence of work. If the organization sets the sequence of work for the worker, this generally indicates that she is an employee.
11. Oral or written reports. If the worker is required to submit oral or written reports, this suggests he is an employee.
12. Payment by hour, week, month. An employee is normally paid by the hour, week or month; whereas a self-employed person is usually paid by the job.
13. Payment of business expenses. If the employer pays the worker’s business or travel expense, this usually suggests that the worker is an employee. A self-employed individual generally takes care of their own business and travel expenses.
14. Furnishing of tools and materials. Self-employed individuals generally furnish their own tools and materials. If such are provided by the employer, then the worker is generally an employee.
15. Significant investment. If all the necessary equipment and premises are furnished by the employer, this can suggest that the worker is an employee.
16. Realization of profit or loss. Employees do not realize profits or losses on the services they perform, whereas self-employed individuals may.
17. Working for more than one firm at a time. An employee typically works for only one firm. A self-employed person typically works for a number of organizations at the same time.
18. Making services available to the public. Workers who make their services available to the general public are normally considered self-employed.
19. Right to discharge. The right to discharge is generally a right of the employer and indicates that the worker is an employee. Self-employed individuals usually cannot be fired as long as they are producing the results specified in their contract.
20. Right to terminate. An employee can normally leave her employer at any time she wishes. A self-employed person, on the other hand, is usually legally obligated to complete the contracted job.
A couple of recent court cases involving employment status highlighted the following seven factors:
1. The degree of control exercised by the employer over the details of the work.
2. Which party invests in the facilities used in the work.
3. The opportunity of individual for profit or loss.
4. Whether or not the employer has the right to discharge the individual.
5. Whether the work is part of the employer’s regular business.
6. The permanency of the relationship.
7. The relationship the parties believe they are creating.
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