The following chart compares the factors used by various federal and state agencies and bodies of law to determine if a worker is an independent contractor or an employee.
It is important to keep in mind that simply calling someone an independent contractor and/or by providing the person with a 1099 does not ensure that the worker will meet the legal requirements.
The risks for employers who misclassify a worker as an independent contractor are significant and include back taxes, penalties, interest, unpaid personal incomes taxes of the misclassified worker, overtime, benefits, leave entitlement, and other rights and protections due to employees. This handout should serve as a generic summary of the very complex factors that various agencies use to make their determinations. There is, however, no substitute for case-specific advice regarding a particular worker. We strongly suggest that, in addition to our assistance, you seek legal counsel from an attorney experienced in this particular area of employment law, and/or a formal, written determination from the Hawaii Department of Industrial Relations and/or the IRS.
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