While the exact line the determines who is an employee and who is an independent contractor is not always understood by everyone, there are some clear test that regulatory authorities use to determine if you are classifying people correctly.
Many employers would rather classify people as independent contractors because they are able to save significant employment taxes on these employees. In addition, they do not have to provide many other benefits that a typical employer would normally offer.
Regulatory authorities typically rely on three main test to determine the classification of a worker: (1) Behavioral control, (2) Financial Control, and (3) the Type of Relationship.
To find out more about what the regulatory agencies look at to make sure employers are following the rules, read our full article in the RedWolf Payroll Knowledge Base.