Contractor or Employee? Risk Checklist
Answer each question about one working relationship. Answers that point toward employment are counted as risk indicators, so you can see where a contractor arrangement is weakest. It's a screening tool, not a ruling.
How worker classification is decided
There's no single test. The IRS looks at the whole relationship under common-law rules, grouped into three categories:
- Behavioral control: does the business control, or have the right to control, what the worker does and how they do it? Detailed instructions, required methods and training point toward employment.
- Financial control: does the worker have a real business of their own, with their own tools, expenses they aren't reimbursed for, the ability to make or lose money, and other clients?
- Relationship: is there a written contract, are benefits provided, is the work expected to continue indefinitely, and is it a key part of the business?
The Department of Labor uses a separate "economic reality" test for minimum wage and overtime, asking whether the worker is economically dependent on the business or in business for themselves. That test is changing: DOL currently applies its 2024 rule, which weighs six factors, and on February 26, 2026 it proposed replacing it with five factors, treating control over the work and the chance of profit or loss as the core two. As of October 2026 the proposal wasn't final. Some states use the stricter ABC test, under which a worker is an employee unless the business proves all three of: freedom from control, work outside the usual course of the business, and an independently established trade.
No single answer decides a case, and a contract that says "independent contractor" doesn't control if the facts say otherwise. For a binding answer on federal employment taxes, a business or worker can ask the IRS for a determination on Form SS-8.
If the answers point toward employment, the misclassification cost calculator estimates what reclassification could cost.
Want your I-9s and contractor files checked?
A records review for small employers is in the works: what's missing, what's expiring, and what to fix first. Email to be told when it opens. Don't attach any documents.
Rules last checked: October 1, 2026. Rates, deadlines and penalty amounts change; each page names its sources.
Spot an error or a rule change?
Email admin@employercheckup.com. Rates, deadlines and penalty amounts change, and corrections are made promptly.
Talk to a professional
For a decision about a specific worker, talk to an employment attorney or CPA. These tools estimate exposure and explain the rules; they don't decide individual cases.
A screening checklist based on published IRS factors, not legal or tax advice, and not a determination of any worker's status. Sources: IRS, "Independent contractor (self-employed) or employee?" and Publication 15-A; U.S. Department of Labor, 2026 independent contractor rulemaking FAQs.