TN 4 (01-20)

SL 60001.610 Employee vs. Independent Contractor

A. How to determine whether a worker is an employee or independent contractor

In cases where The Social Security Administration (SSA) must determine if a worker is an employee or an independent contractor, SSA uses the common law test . To determine whether an individual is an employee or an independent contractor under the common law test (see RS 02101.020; 20 C.F.R. § 404.1007), SSA will consider all evidence of control and independence, which falls into three main categories:

  • Does the entity have the right to direct and control how the worker performs the specific task for which the worker is hired?

  • Does the entity have the right to direct and control the business and financial aspects of the worker’s activities?

  • What is the relationship of the parties?

NOTE: 

A written contract is very important evidence that demonstrates the type of relationship the parties intended to create. A written agreement describing the worker as an independent contractor is evidence of the parties’ intent. The facts and circumstances under which a worker performs services are determinative. The substance of the relationship, not the label, governs the worker’s status

B. Who to contact for specific questions

As noted in RS 02101.810, SSA and the Internal Revenue Service (IRS) have independent authority to apply the common law test to determine if a worker is an employee or an independent contractor. The following standards govern which agency's authority applies:

  • For questions concerning whether a worker is an employee for purposes of coverage under a State's Section 218 Agreement or to resolve earnings discrepancies, SSA will resolve the question.

  • For questions concerning whether a worker is an employee for purposes of the Federal Insurance Contributions Act (FICA) tax withholding, IRS will resolve the question.


To Link to this section - Use this URL:
http://policy.ssa.gov/poms.nsf/lnx/1960001610
SL 60001.610 - Employee vs. Independent Contractor - 01/29/2020
Batch run: 01/29/2020
Rev:01/29/2020