Employee vs. Contractor (1099) Risk Checker

Employee vs. Contractor (1099) Risk Checker

Answer 8 quick questions about how the work actually happens — not just what the contract says. You’ll get a misclassification risk rating based on the IRS control factors (behavioral control, financial control, and the working relationship).

1. Who decides how the work gets done — methods, schedule, and order of tasks?
2. Who provides the tools, equipment, and workspace?
3. How is the worker paid?
4. Does this worker provide similar services to other clients?
5. Can the worker hire assistants or subcontract parts of the work?
6. Is there a written agreement stating they’re an independent contractor?
7. Is the work part of your company’s core business — what you sell?
8. How long is the working relationship?
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What to know before you rely on this

  • Agencies look at reality, not labels. A signed “independent contractor agreement” helps, but the IRS and state agencies decide based on how the work actually happens.
  • The IRS weighs three things: behavioral control (who directs the work), financial control (who bears the business risk), and the relationship of the parties (contracts, benefits, permanence).
  • Many states are stricter. California, Massachusetts, New Jersey, Connecticut, and others use the ABC test — the worker is an employee unless (A) they’re free from your control, (B) the work is outside your usual business, and (C) they’re independently established in that trade. Failing any one prong means employee status.
  • Misclassification is expensive. Back payroll taxes, overtime liability, benefits exposure, and state penalties can follow a single determination — in several states, willful misclassification carries extra fines.
  • When in doubt, file Form SS-8. The IRS will review the facts and issue a worker-status determination — slow, but definitive at the federal level.
General information only — not legal advice. Worker classification depends on federal law plus your state’s test, and the stakes include taxes, wage claims, and penalties. Talk to an employment attorney before classifying or reclassifying a worker — especially if this quiz flagged medium or high risk.

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