Common Law Employment Test Definition

The common law employment test is used to determine whether a worker is an employee or contractor by examining the amount of control an employer has.

Common Law Employment Test Extended Definition
A common law employee meets a set of factors that are used to determine employee classification. The common law employment test was a 20-question test provided by the IRS.

Although the IRS still requires worker classification for tax filing purposes, the 20-question test is no longer used. Now, the IRS provides common law rules for determining worker status. These rules fall into three categories:

  1. Behavioral
  2. Financial
  3. Type of relationship

Employers have more right to control and direct an employee than an independent contractor. Employers must determine who controls the way work is performed using the common law rules. Independent contractors, under IRS laws, remain in control of the manner and means by which the work is performed.

Related Articles
Who Is an Employee? 
Employee (Common-Law Employee) 
Independent Contractor (Self-Employed) or Employee?

Last Updated By

Rachel Blakely-Gray | Feb 15, 2023

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