Individuals may be excluded from coverage if:
The individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the contract of hire for services; and
The individual has been and will continue to be free from control or direction over the means of performance of those services, both under the individual's contract of hire and in fact.
The following factors are considered to determine if an individual is customarily engaged in an independently established trade, occupation, profession or business:
Separate Place of Business. The individual has his own place of business separate from that of the employer.
Tools and Equipment. The individual has a substantial investment in the tools, equipment, or facilities customarily required to perform the services. "Tools of the trade" such as those used by carpenters, mechanics, etc. do not necessarily demonstrate independence.
Other Clients. The individual performs services of the same nature for other customers or clients and is not required to work full time for the employer.
Profit or Loss. The individual is in a position to realize a profit or loss through his independently established business activity.
Advertising. The individual advertises his service in telephone directories, newspapers, magazines, or by other methods clearly demonstrating that he holds himself out to the public to perform the services.
License. The individual has obtained any required and customary business, trade or professional licenses.
Business Tax Forms. The individual files self-employment and other business tax forms required by the Internal Revenue Service and other tax agencies.
The following factors will be considered to determine if an individual's services are subject to the employer's right of control and direction:
Instructions. A worker who is required to comply with another person's instructions about when, where and how he is to work is ordinarily an employee. This factor is present if the employer for whom the service is performed has the right to require compliance with instructions.
Training. Training an individual by requiring an experienced person to work with the individual, by corresponding with the individual, by requiring the individual to attend meetings, or by using other methods, indicates that the employer for whom the services are performed expects the services to be performed in a particular method or manner.
Pace or Sequence. A requirement that the service must be provided at a pace or ordered sequence imposed by the employer indicates control and direction.
Work on Employer's Premises. A requirement that the service be performed on the employer's premises generally indicates that the employer for whom the service is performed has retained a right to supervise and oversee the manner in which the service is performed, especially if the service could be performed elsewhere.
Personal Service. If the services must be performed personally, presumably the employer for whom the services are performed is interested in the methods used to accomplish the work as well as in the results.
Continuing Relationship. A continuing relationship between the individual and the employer indicates that an employer-employee relationship exists. A continuing relationship may exist where work is performed at frequently recurring, although irregular intervals.
Set Hours of Work. The establishment of set hours of work by the employer indicates control.
Method of Payment. Payment by the hour, week or month generally points to an employer-employee relationship, provided that this method of payment is not just a convenient way of paying a lump sum agreed upon as the cost of a job.
These factors are intended as guides for determining whether an individual is an employee or independent contractor. The degree of importance of each factor varies depending on the occupation and the factual context in which the services are performed.
Individuals classified as "independent contractor" either by themselves, by the principal for whom they work, or by contract are not excluded from being considered in employment simply because of that classification. The Act does not contain the term "independent contractor" and an exclusion for such does not exist. In order for the services performed by an individual to be excluded from coverage under the Act, they must satisfy both tests mentioned above.
If you have classified or contemplate classifying any of your workers as "self-employed" or "independent contractors," please notify DWS so that a proper determination of status can be made. By doing this you may avoid additional unexpected liabilities, interest and penalties.