Classifying Contract Workers Minnesota

• The worker hires, supervises and pays his or her assistants


• The worker is free to work when and for whom he or she chooses


• The worker does the work at his or her own office or shop


• The worker is paid by the job or receives a straight commission


• The worker has the risk of profit or loss


• The worker does work for several businesses at one time


• The worker makes his or her services available to the general public (sometimes indicated by having business cards or a listing in the Yellow Pages)


• The worker cannot be fired as long as he or she meets contract specifications

Some states have rules regarding independent contractors so check with your state's employment office before hiring. In addition, certain workers are automatically classified as employees, regardless of their work arrangement with you. Workers in this category include: full-time salespeople who sell goods for resale; full-time life insurance agents working mainly for one company; at-home workers who are supplied with material and given work performance specifications; and food and laundry delivery drivers.

To increase your chances of convincing the IRS that a worker is in fact an independent contractor, take the following steps:

• State in your contracts that a worker is an independent contractor including a statement that all payments to the worker will be reported to the IRS on Form 1099.


• Pay for work by the job, instead of by the hour, the week or the month.


• Have all workers submit invoices for work before paying them.


• State in all contracts with contract workers that the individual is responsible for his or her own insurance, including workers' compensation.


• Construct a contract that allows the contract worker to use his or her own tools and equipment, and to hire his or her own assistants.