To avoid certain financial and other obligations, many companies like to classify workers as independent contractors rather than employees.  Simply calling someone an independent contractor, however, does not mean they are one.  In determining whether a worker is an employee or an independent contractor, different tests are applied for different purposes.  For example, the test for determining whether someone is an employee for purposes of federal wage and hour laws is slightly different than the test used by the IRS to determine whether an employer is liable for employment taxes.  Generally speaking, however, independent contractors run their own businesses and control the manner in which they perform their work (though not necessarily the result).  Because the consequences of improper classification can be significant, companies should take great care to accurately assess and classify their workers.

I am a lawyer and an entrepreneur in Denver.  This is the tenth in a series of posts about legal issues affecting startups.