Business owners must determine whether the individuals providing services to the business are employees or independent contractors. However, there is no single definition of “employee” or “independent contractor.” The legal test is different depending on the area of employment law.
For example, a worker who is classified as an independent contractor under the IRS test may be classified as an employee for purposes of Maryland Unemployment Insurance Law. Accordingly, each worker must be evaluated with respect to each area of employment law. The central theme throughout all of the legal tests is the degree of control the business exercises over the worker.
Proper worker classification is important as the liabilities for misclassification are significant. For assistance determining how to classify individuals who work for your business, contact a member of Stein Sperling’s employment law department.