TN 18 (08-13)

RS 02101.865 Development When Information in File Suggests Dubious Employer-Employee Relationship

A. Additional facts field offices should consider to determine worker status

Unless the evidence meets the conditions in RS 02101.800A, question the parties further and secure additional evidence. Form SSA-7160 will not furnish adequate information in all cases. Use this form as a tool to gather information to assist with forming a complete and accurate description of the relationship in question. Where the worker’s and alleged employer’s answers do not appear to reflect an accurate and complete factual picture of the relationship, obtain such supplementary evidence as:

  • written records;

  • contracts;

  • written agreements; and

  • statements from anyone having knowledge of the employment relationship.

There are additional facts that are relevant when determining worker status. The relationship of the alleged employer and the worker is reflective of the parties’ intent concerning control of how to perform the work. When looking at the relationship between the alleged employer and the worker, consider the following:

1. Written contract or agreement

The written contract or agreement usually contains the parties’ intent. It may also contain information on compensation, expected expenses, and the obligations and rights of each party on how to perform the work.

2. Forms W-2 (Wage and Tax Statement)

Usually, the filing of Form W-2 indicates that the worker is an employee. Check to see if the employer filed tax returns and wage reports for the worker. If no, indicate the reason for the failure to file.

3. Employee benefits

We find a worker to be an employee if he or she receives employee benefits such as:

  • paid vacation;

  • paid sick days;

  • health, life, or disability insurance; or

  • a pension.

We may find a worker to be an independent contractor if the employer excludes the worker from a benefits plan because the employer does not consider the worker to be an employee. Including the worker in a tax qualified retirement plan is strong evidence of employee status.

4. Indefinite, permanent, and long-term relationships

We generally consider the intent of an employment relationship as evidence when an employer engages a worker with the expectation that the relationship will continue indefinitely. We also consider the existence of a permanent relationship as evidence when determining employment status. Long-term relationships may exist between businesses and independent contractors or employees.

5. Temporary relationships

Temporary business relationships can occur with either employees or independent contractors. For example, independent contractors typically have temporary relationships with the businesses they work for. Employees may have temporary relationships with their employer when working on a seasonal, project, or as needed basis.

6. Further investigation

Answering the following questions will help you examine the employment relationship:

  • Did the employer have other employees during the same period?

  • Did the employer file tax returns and wage reports for such employees?

  • Is the business a sole proprietorship, partnership, or corporation?

  • Is the worker a partner or does he or she have any proprietary interest in the business? If so, what are the periods in which he or she owned such interest?

Where doubt remains as to the status of the employment, get evidence from other sources such as:

  • affidavits of persons who are aware of the employment; and

  • certification of the employer's records.

B. FOs documenting supplemental information

FOs may use Form SSA-5002 (Report of Contact) to clarify and supplement information, or report any personal knowledge relating to the issue. If evidence is unavailable, or if you cannot reconcile discrepant statements, document the file with your opinion on whether circumstances appear reasonable, and give a complete explanation of the basis for the conclusion.

Case development is complete when it shows the extent that the alleged employer directs and controls the worker.

In some cases, a simple explanation from the worker may remove the doubt about th