Page 39 - AVN December 2015

applies even if the person is given freedom of
action. What matters is that the employer has
the legal right to control the details of how the
services are to be performed.”
This passage above is confusing enough to
make any employer groan. Then, one must
review and interpret the tests that the IRS uses
to determine the employee/independent con-
tractor relationship and see if that sheds any
light on the subject.
The IRS has reviewed these matters pursu-
ant to one of two separate tests for determin-
ing if a worker is an independent contractor:
the “common law” test and the “reasonable
basis” test. The common law test is more com-
plex; it initially addresses twenty factors the
IRS considers in these types of situations.
The twenty factors in the common law test are as
follows:
1. The putative employer’s right to require
compliance with instructions;
2. Training by the putative employer;
3. Integration of the worker’s services into
business operations;
4. A requirement that the worker’s services be rendered personally;
5. The putative employer’s hiring, supervising and paying a worker’s
assistants;
6. A continuing relationship;
7. Set hours of work;
8. A requirement that the worker devote himself/herself substantially
full time for the putative employer rather than being free to work
when and for whom he or she chooses;
9. Doing work on the putative employer’s premises;
10. Requiring the worker to perform services in the order or se-
quence set by the putative employer;
11. Requiring the worker to submit oral or written reports;
12. Paying by the hour, week or month rather then by the job on or
on a straight commission;
13. Paying travel and business expenses;
14. Furnishing tools and materials;
15. A lack of significant investment by the worker;
16. An absence of ability by the worker to realize or profit or suffer a
loss;
17. Working for no more than one firm at a time;
18. The workers not making his or her services available to the gener-
al public on a regular and consistent basis;
19. A right to discharge the worker unilaterally rather than per con-
tract terms; and
20. A right by the worker to terminate the relationship without
incurring liability. (Mayfield Therapy Center v. Commissioner of Internal
Revenue and Ardmore Day Sap, Inc. v. Commissioner of Internal Revenue [,
[2010])
Within those twenty factors, the IRS appears to advise its own
auditors to look most closely at No. 1 (instructions to workers), No.
2 (job training) and No. 16 (worker’s ability to make a profit or suffer
a loss). On top of all of this, one must be aware that not every factor
applies in every situation; no one factor is dispositive and the total
situation is what controls. Continued on next page
“… here, the economic
reality is that the dancers are
not in business for
themselves but are
dependent upon finding
employment in the business of
others. We reject the
defendants’ creative
argument that the
dancers are mere tenants who
rent stages, lights,
dressing rooms, music ….”
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