Independent Contractor

No consistent, uniform definition distinguishes an employee from an independent contractor. Some statutes contain their own definitions. The U.S. Supreme Court has held that when a statute contains the term employee but fails to define it adequately, there is a presumption that traditional agency-law criteria for identifying master-servant relationships apply (National Mutual Insurance Co. v. Darden, 503 U.S. 318, 112 S. Ct. 1344, 111 L. Ed. 2d 581 [1992]).

One comprehensive test that takes into account agency-law criteria and numerous other factors courts have created to define independent contractor status was developed by the INTERNAL REVENUE SERVICE (IRS). Known collectively as the 20-factor test, the enumerated criteria generally fall within three categories: control (whether the employer or the worker has control over the work performed), organization (whether the worker is integrated into the business), and economic realities (whether the worker directly benefits from his or her labor). The 20 factors serve only as a guideline. Each factor's degree of importance varies depending on the occupation and the facts involved in a particular case.