Compliance and classification

What is worker classification? It is the decision about whether someone who works for you is an employee or an independent contractor. It also goes by contractor classification or independent contractor classification. It looks like a box on a form. In practice it decides who withholds tax and who owes benefits and overtime, and then who pays when the answer turns out to be wrong.

There is no single test. In the US, the Internal Revenue Service (IRS) groups the evidence into behavioral control, financial control and the type of relationship, and tells businesses to weigh the whole relationship and to document the factors behind each determination (IRS, "Independent contractor (self-employed) or employee?", read October 2026). The Department of Labor (DOL) and a number of states apply tests of their own, and they do not always agree. In the UK, under the off-payroll working rules known as IR35, the client is often the one responsible for the decision and should give its reasons in a status determination statement, according to guidance from HM Revenue and Customs (HMRC) (read October 2026).

My position: classification is decided by evidence, and operations create that evidence long before anyone in legal looks at it. Who set the hours. Whose laptop. Who approved the timesheet, and whether the work was a deliverable or a seat. A contract that says "independent contractor" does not outweigh a year of being managed like an employee. A staffing agency or a vendor management system (VMS) does not make the risk disappear either. It changes where the records live and how fast you can produce them.

The posts in this topic read the primary sources and turn them into decisions a program owner can act on: decision tables across the tests, worked examples, checklists of the evidence to keep. Every regulatory post names its source, links it and says when it was read, because these rules change. None of it is legal advice. I write it so that the conversation with your adviser starts from your records instead of a blank page.