3. The worker's relative investment in his or her business should be comparable to that of the
employer, demonstrating that the worker is exposed to a risk of loss.
o Investing in tools and equipment is not necessarily a business investment or a capital
expenditure that indicates that the worker is an independent contractor.
o The comparison of the investments of the worker and employer should not be limited to a
particular job; instead, the relative investments of the worker in his or her business should
be compared to that of the employer in its business.
4. The worker's business skills, judgment, and initiative, not his or her technical skills, will be
used to determine if the worker is economically independent - it will be assumed that an
independent contractor will use his or her skills in some independent way, such as
demonstrating business initiative.
o Specialized skills do not indicate that workers are in business for themselves, especially if
those skills are technical and used to perform the work.
o For skills to be indicative of independent contractor status, they should be used in some
independent way, such as demonstrating business initiative.
5. Permanence or indefiniteness in the worker-employer relationship suggests that the worker
is an employee - it will be assumed an independent contractor will seek independence from
a single employer.
o Even if the working relationship lasts weeks or months instead of years, there can be a
permanence or indefiniteness to it as compared to an independent contractor, who
typically works one project for an employer and does not necessarily work continuously
or repeatedly for an employer.
o A lack of permanence or indefiniteness does automatically suggest an independent
contractor relationship: neither working for other employers nor not relying on the
employer as his or her primary source of income transform the worker into the
employer's independent contractor.
o A worker's lack of a permanent or indefinite relationship with an employer is indicative
of independent contractor status if it results from the worker's own independent business
initiative.
6. The nature and degree of oversight of the employer will be considered - it will be assumed
that an independent contractor will control meaningful aspects of the work performed.
o The worker's control over meaningful aspects of the work must be more than theoretical the worker must actually exercise it.
o Some employers assert that the control that they exercise over workers is due to the
nature of their business, regulatory requirements, or the desire to ensure that their
customers are satisfied; however, control exercised over a worker, even for any or all of
these reasons, still indicates that the worker is an employee.
For More Information
The WHD Interpretation may be found here.