Tax lawyers Robert Wood and Christopher Krachale write in Home Workers: Employee Status Hidden in Plain Sight:
There are many tests for determining who is an employee and who is not. Yet much of it comes down to the common law right to control, in which rules of agency are used to determine employee status. The common law asks whether the person for whom services are performed has the right to control and direct the individual who performs the services, regarding not only the result but also the details and means of accomplishing the result.
Because of the inherent subjectivity of the common law test, the proper categorization of workers as employees or independent contractors has been an irritant for employers for decades. It has become even more so in recent years due to the increase in the numbers of workers who work from their homes.
Home workers (among others collectively called statutory employees) are automatically considered to be employees without regard to the common law factors:
Individuals who work at home on materials or goods supplied by an employer that must be returned to the employer or his designate and for which the employer furnishes specifications regarding the work to be done [are employees].
Wood and Krachale call for a narrowing of the IRS’s application of the home worker classification:
The IRS’s application of the home worker classification has begun to encompass far more workers than Congress probably intended. Given the growing tendency for independent contractors to work from home (or at least off-site) using telecommuting and Internet technologies, it is possible that many more workers will be classified as statutory employees.
(Hat Tip: Paul Caron)
Related Posts:
- Fed-Ex Drivers are Independent Contractors
- Tax Update – November 2008 – Independent Contractor v. Employee
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1 TIGTA Wants IRS to Crack Down on Worker Misclassification // May 21, 2010 at 5:04 pm
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