Employee or independent contractor? The IRS common-law rules

The test in one sentence

The publication states it plainly. Under common-law rules, anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done, and that is so even when you give the employee freedom of action. What matters is the right to control the details of how the services are performed. If there is an employer-employee relationship, the label makes no difference: the substance, not the name, governs, and it does not matter whether the person works full time or part time. An independent contractor, by contrast, is someone in an independent trade, business or profession who offers services to the public and is controlled only as to the result.

Behavioral control

This category asks whether the business has a right to direct and control how the worker does the task. The publication lists instructions about when and where to do the work, what tools or equipment to use, what workers to hire or to assist, where to buy supplies and services, which tasks must be done by a specified individual, and what order or sequence to follow. It adds a subtlety: the amount of instruction needed varies by job. Even if no instructions are given, enough behavioral control may exist if the business has the right to control how results are achieved, and a business may lack the knowledge to instruct a highly specialized professional. The key consideration is whether the business has retained the right to control the details or has given it up.

Training is the second behavioral factor. An employee may be trained to perform services in a particular manner, whereas independent contractors ordinarily use their own methods.

Financial control

This category looks at the business side of the job. The publication lists five facts. Unreimbursed business expenses: contractors are more likely to have them, and fixed ongoing costs incurred whether or not work is being done are especially important, though employees can have unreimbursed expenses too. The extent of the worker’s investment: a contractor often has a significant investment in facilities or tools, but a significant investment is not necessary for contractor status. Availability to the market: contractors often advertise, keep a visible business location and seek out work. Method of payment: a guaranteed regular wage for an hourly, weekly or other period usually indicates an employee even if commission is added, while a flat fee or time-and-materials pay suggests a contractor, though paying contractors by the hour is common in some professions such as law. And profit or loss: a contractor can make either.

Type of relationship

The third category covers how the parties relate. Written contracts describing the intended relationship count, though as noted a label does not control. So does whether the business provides employee-type benefits such as insurance, a pension plan, vacation pay or sick pay. Permanency matters: engaging a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, is generally evidence of an employer-employee relationship. And the extent to which the services are a key aspect of the company’s regular business matters, because if they are, the business is more likely to have the right to direct and control them. The publication’s example is a law firm that hires an attorney.

Using the checklist above

The twelve selectors mirror the publication’s own bullet points. Mark each one as pointing toward employee, toward independent contractor, or unknown, using the descriptions in the labels. The tool counts the indicators and tells you which way they lean. Read the result as a way to organize facts, not as a ruling: the publication says all the information that provides evidence of the degree of control and independence must be considered, and gives no weights, so a count of 7 to 5 does not make a worker an employee any more than a contract clause does.

For example, a worker who sets their own hours, supplies their own tools, invoices a flat fee per project, advertises to other clients and has no benefits will tilt strongly toward contractor. A worker on a fixed schedule, using the business’s equipment, paid weekly, with no other clients and sick pay will tilt toward employee. The hard cases are the mixed ones, and for those the publication’s remedy is Form SS-8.

When the common-law answer is not the end

Even a worker who is a contractor at common law may be treated as an employee by statute for certain taxes. The publication lists four statutory employee categories (certain drivers, full-time life insurance sales agents, home workers on supplied materials, and full-time traveling or city salespeople), and three statutory nonemployee categories treated as self-employed. See our statutory nonemployee page. For the consequences of getting the answer wrong, see worker misclassification. For the publication’s industry examples, see the construction and trucking examples.

Sources

• IRS Publication 15-A, Employer’s Supplemental Tax Guide (2026): section 2, Employee or Independent Contractor?: Common-Law Rules. Read November 2, 2026.

Edition read: Publication 15-A (2026), for use in 2026. Rates, wage bases and dollar limits on this page are the 2026 figures printed in that edition; check the current publication and the IRS employment tax pages for your tax year. This page summarizes the publication and does not replace it.