Ownership of Tools
Employees are provided equipment and tools by the employers to carry out their job. Contractors, on the other hand, buy their tools. Bring-your-own-device (BYOD) policy doesn’t change employee status as a contractor. But, when workers buy expensive equipment to perform the job, they’re more likely to be classified as contractors.
Integration refers to an individual’s degree of involvement in the commercial activities of an organization. If the work carried out by an individual can be viewed as a separate business of the individual rendering the service, they’re probably contractors. Where the individual integrates their activities to an employer’s business, an employee relationship probably exists.
Economic reality test
There is an inference of employment when an individual doesn’t share the profit or loss. On the other hand, if the individual is ultimately responsible for the profit or loss, it would indicate a contractor situation. As a general rule of thumb, an individual not responsible for covering the operating costs will probably be classified as an employee.
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