Thought I would post this for reference – there are specific rules that determine contractor status in New York State.
NYSDOL – http://www.labor.state.ny.us/ui/dande/ic.shtm; http://www.labor.ny.gov/workerprotection/publicwork/PDFs/FairPlayActE.pdf
IRS – http://www.irs.gov/businesses/small/article/0,,id=99921,00.html; http://www.law.cornell.edu/uscode/26/usc_sec_26_00003509—-000-.html
Independent contractors are free from:
- Direction and
- Control in the performance of their duties.
They are in business for themselves, offering their services to the general public.
Signs of independent contractor status include a person who:
- Has an established business
- Advertises in the electronic and/or print media
- Buys an ad in the Yellow Pages
- Uses business cards, stationery and billheads
- Carries insurance
- Keeps a place of business and invests in facilities, equipment, and supplies
- Pays their own expenses
- Assumes risk for profit or loss
- Sets their own schedule
- Sets or negotiates their own pay rate
- Offers services to other businesses (competitive or non-competitive)
- Is free to refuse work offers
- May choose to hire help
An employer-employee relationship may exist regardless of how the hiring party describes it. For example, if you give a worker a 1099 Form rather than a W-2 Form, they may still be an employee. Persons who work for you may qualify as employees under the law, even if, for example:
- You have the person sign a statement claiming to be an independent contractor
- They waive any rights as an employee
- You require them to obtain a dba in order to work for you
Under the Unemployment Insurance Law, an agreement by employees to waive their rights under the law is not valid.
Remember that the real distinction between the employer-employee relationship and the independent contractor relationship depends primarily on the level of supervision, direction and control exercised by the person engaging the services. It is not defined by what the relationship is called by the participants.
Whether the relationship is one of employer-employee will depend on several factors.