Law Commons^™

Independent Contractors In Law And In Fact: Evidence From U.S. Tax Returns, Eleanor Wilking

Northwestern University Law Review

Federal tax law divides workers into two categories depending on the degree of control exercised over them by the service purchaser (i.e., the firm): employees, who are subject to direct supervision; and independent contractors, who operate autonomously. Such worker classification determines the administration of income tax and what it subsidizes, as well as which nontax regulations pertain, such as workplace safety and antidiscrimination protections. The Internal Revenue Service and other federal agencies have codified common law agency doctrine into multifactor balancing tests used to legally distinguish employees from independent contractors. These tests have proved challenging to apply and costly to …