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1099 contractor or W-2 employee?

13 questions from the common-law factors on irs.gov. Each answer shows which way it points. Free, nothing you tick is sent anywhere.

Before you start

This is a checklist, not a legal determination. The IRS can decide via Form SS-8 (About Form SS-8).

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General information, not legal advice. This page is for general information only and isn’t legal, financial or tax advice. Laws vary by state and change; check the official source or talk to a qualified professional about your situation. Every rule on this page links to its official source.

The IRS factors, one by one

The IRS groups the facts into three categories: behavioral control, financial control and the type of relationship. It says all information that provides evidence of the degree of control and independence must be considered (IRS).

Behavioral control

The IRS: “Behavioral control refers to facts that show whether there is a right to direct or control how the worker does the work.” (IRS: Behavioral control)

Do you tell the worker when, where and how to do the work?

What the IRS says

“An employee is generally subject to the business’s instructions about when, where, and how to work.”

Are your instructions detailed?

What the IRS says

“More detailed instructions indicate that the worker is an employee. Less detailed instructions reflects less control, indicating that the worker is more likely an independent contractor.”

Do you evaluate how the work is done, not just the end result?

What the IRS says

“If an evaluation system measures the details of how the work is performed, then these factors would point to an employee. If the evaluation system measures just the end result, then this can point to either an independent contractor or an employee.”

Do you train the worker on how to do the job?

What the IRS says

“If the business provides the worker with training on how to do the job, this indicates that the business wants the job done in a particular way. This is strong evidence that the worker is an employee.”

Financial control

The IRS: “Financial control refers to facts that show whether or not the business has the right to control the economic aspects of the worker’s job.” (IRS: Financial control)

Has the worker made a significant investment in the equipment they use?

What the IRS says

“An independent contractor often has a significant investment in the equipment he or she uses in working for someone else.”

Does the worker pay business expenses that you do not reimburse?

What the IRS says

“Independent contractors are more likely to have unreimbursed expenses than are employees.”

Can the worker make a profit or lose money on the work?

What the IRS says

“Having the possibility of incurring a loss indicates that the worker is an independent contractor.”

Does the worker offer the same services to other businesses (advertises, has a business location)?

What the IRS says

“An independent contractor is generally free to seek out business opportunities. Independent contractors often advertise, maintain a visible business location, and are available to work in the relevant market.”

How do you pay the worker?

What the IRS says

“An employee is generally guaranteed a regular wage amount for an hourly, weekly, or other period of time. This usually indicates that a worker is an employee, even when the wage or salary is supplemented by a commission. An independent contractor is usually paid by a flat fee for the job.”

Type of relationship

The IRS: “Type of relationship refers to facts that show how the worker and business perceive their relationship to each other.” (IRS: Type of relationship)

Is there a written contract that calls the worker an independent contractor?

What the IRS says

“Although a contract may state that the worker is an employee or an independent contractor, this is not sufficient to determine the worker’s status.”

Do you give the worker benefits such as insurance, a pension plan, paid vacation or sick days?

What the IRS says

“Businesses generally do not grant these benefits to independent contractors. However, the lack of these types of benefits does not necessarily mean the worker is an independent contractor.”

Do you expect the work to continue indefinitely, rather than for a specific project or period?

What the IRS says

“If you hire a worker with the expectation that the relationship will continue indefinitely, rather than for a specific project or period, this is generally considered evidence that the intent was to create an employer-employee relationship.”

Is the work a key part of what your business does?

What the IRS says

“If a worker provides services that are a key aspect of the business, it is more likely that the business will have the right to direct and control his or her activities.”

There is no verdict here on purpose. The IRS says there is no set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone.

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What the IRS says about weighing them

“Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor. There is no “magic” or set number of factors that “makes” the worker an employee or an independent contractor and no one factor stands alone in making this determination.”

“If you classify an employee as an independent contractor and you have no reasonable basis for doing so, then you may be held liable for employment taxes for that worker (the relief provisions, discussed below, will not apply).”

The Department of Labor test is under review

The Department of Labor uses its own economic reality test for minimum wage and overtime. As of Sep 24, 2026, its rulemaking page says the Department announced a proposed rule on February 26, 2026 to rescind its 2024 independent contractor rule, which it says it is no longer applying in its investigations, and to replace it with a streamlined analysis; the comment period closed on April 28, 2026. The page does not announce a final rule. Because that test is changing, this checklist uses only the IRS factors (DOL: 2026 proposed rule).

States can use their own tests for state wage law and unemployment insurance. Check with your state labor office.

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Questions people ask

What is the difference between a 1099 contractor and a W-2 employee?

For employees, the business generally withholds income tax, Social Security and Medicare tax, pays the employer share and pays unemployment tax; for independent contractors it generally does not, according to the IRS page on independent contractors and employees. The names come from the forms: Form W-2 for employees, Form 1099-NEC for contractors.

Does a signed contractor agreement make someone a contractor?

Not on its own. The IRS says a contract is not sufficient to determine the worker's status and that how the parties work together decides it (IRS: Type of relationship).

How many factors have to point one way?

There is no set number. The IRS says businesses must weigh all the factors, that no one factor stands alone, and to look at the entire relationship (IRS). That is why this checklist shows the direction of each answer and no total.

Who can decide officially?

Either the business or the worker can file Form SS-8 and the IRS will determine the worker's status; the IRS says it may take at least six months (About Form SS-8).

Sources (8)

Checked Sep 24, 2026 · How we verify every rule · Report an error