Some consultants are employees. They work under conditions where they are greatly
restricted as to when, where, and how they work. Such consultants may be employees
under the common-law rules.
An employer-employee relationship exists when the consultant:
is not free to seek other work;
receives assignments; and
works during specified hours.
Usually, such consultants receive facilities to do the work, and the employer provides
helpers as needed. They may work during fixed hours or agree to place themselves “on
call” to work whenever requested. They regularly report their progress on assignments
and the employing firm can change their assignment. They have no business expenses
and no investments in facilities for doing the work, so they cannot realize a profit
or suffer a loss. Their work is an integral part of the firm's business. In addition,
they do not determine the schedule for their services, nor are they in control of
their own time, as they are subject to the will of the employer as to their services.
There are cases where some firms utilize the services of certain retired employees
by retaining them as consultants under arrangements that appear on the surface to
constitute an independent contractual relationship, but actually serve as a means
to continue the employer-employee relationship.