VIDEO PODCAST: Assessing Independent Contractor vs. Employee Status
Mike and Ben discuss the legal standards for determining whether a nonprofit organization is permitted to a treat a worker as an independent contractor rather than an employee, the risks of worker misclassification and the different ways this issue can come to light, the reformulated IRS “20-factor” test, common mistakes and misconceptions about these rules, and more.
PREVIEW SHORTER CLIP:
FULL 30-MINUTE VIDEO:
CHAPTERS:
00:00 - Intro
01:58 - The many ways worker classification issues can arise and get nonprofits in trouble
05:47 - The common law contractor vs. employee test
07:59 - Factors applied by the IRS to determine contractor vs. employee status
09:01 - IRS behavioral factors
10:42 - IRS financial factors
12:25 - One of the most important factors
14:15 - IRS relationship factors
16:37 - Tests applied in other contexts and the ABC test applied in some states
19:02 - Common mistakes and misconceptions: relying too much on one or two factors
20:40 - Common mistakes and misconceptions: interns and internships
21:51 - Common mistakes and misconceptions: treatment of corporate officers
26:01 - Requiring consultants and contractors to adhere to policies and guidelines
FURTHER READING:
TEMPLATE: Independent Contractor Agreement
Q&A #108 – Can interns be paid as independent contractors?
IRS website: Independent contractor (self-employed) or employee?
Treasury Regulations, 26 C.F.R. § 31.3121(d)-1 (“Generally, an officer of a corporation is an employee of the corporation. However, an officer of a corporation who as such does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration is considered not to be an employee of the corporation. A director of a corporation in his capacity as such is not an employee of the corporation.”).
