Help for employers…

Employers who are concerned that they might be in violation of the FLSA classifications should submit form SS‐8 (found at: http://www.irs.gov/pub/irs‐pdf/fss8.pdf) for any employees in question. The IRS uses a list of common‐law criteria to determine whether a worker should be considered W‐2 or 1099. The criteria can be summarized in three main characteristics: Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training or other means. Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job. Type of Relationship factor relates to how the workers and the business owner perceive their relationship. In general, if the business has the right to control or direct not only what is to be done, but also how it is to be done, then the workers are most likely employees. If the business can direct or control only the result of the work done—and not the means and methods of accomplishing the result, then the workers are probably independent contractors.

 

1. Bureau of National Affairs, Inc. (2011) Bill Would Amend FLSA, Target Misclassification Payroll Practitioner’s Monthy 22(5). Accessed from Business

Source Complete. Retrieved from http://web.ebscohost.com

 

2. Aspen Publishers, Inc. (2011) Sweeping Overhaul of Worker Classification Ahead? Payroll Manager’s Letter, 27(6), 1‐2. Accessed from General OneFile

Infotrac. Retrieved from www.gale.cengage.com/onefile/

 

3 . US Office of Management and Budget 2011). Fiscal Year Budget of the US Government. WashingtonDC: Author. Retrieved from http://

whitehouse.gov/omb/budget